China's producer prices rise 5.7% in October, consumer inflation slows to 0.7%

China’s producer price index (PPI) jumped 5.7% in October, the fastest rise since June 2022 and the third consecutive month of acceleration, according to data released by the National Bureau of Statistics. The gain was driven mainly by sharp price increases in mining and raw materials, with external demand cited as a key factor by Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. Meanwhile, consumer inflation slowed to 0.7% in October, the first drop after two months of gains, missing economists’ forecast of 0.8%.

The uptick in wholesale prices reflects a global rebound in demand for Chinese commodities, especially metals, as economies recover from pandemic‑related disruptions. At the same time, domestic demand remains tepid, largely because the property market is still struggling and household confidence is low. Zhang warned that the lack of a clear stabilisation in real estate is weighing on local government revenue and keeping consumer spending subdued. This weak internal demand environment has kept core inflation – which strips out volatile food and energy prices – down at 0.8%, below the 1.0% seen in September.

Consumer prices were still nudged up by gasoline, the biggest contributor to the 0.7% rise, but a sharper than expected fall in food prices offset that pressure. The mixed picture came as China’s economy showed signs of expansion: the third‑quarter growth surpassed forecasts and retail sales in September surged. The CSI 300 index gained 0.56% after the data release, reflecting investor optimism about the economy’s trajectory. Analysts say that unless the property sector stabilises and domestic demand picks up, inflation will likely remain modest, leaving policymakers with a delicate balance between supporting growth and containing price pressures.