- China’s consumer price index contracted 0.2% year-on-year in October, more than the expected 0.1% decline.
- The producer price index fell 2.6% last month, falling for the 13th consecutive month.
An employee works on the assembly line of LED lighting products in China.
Vcg | Visual China Group | Getty Images
China’s consumer prices fell in October as the world’s second-largest economy struggled with an uneven recovery from the coronavirus crisis.
Data from China’s National Bureau of Statistics on Thursday showed the consumer price index fell 0.2% in October from a year earlier, more than the 0.1% decline expected by economists polled by Portal.
This came after China’s CPI unexpectedly stagnated in September, highlighting the need for further policy support.
Producer prices fell 2.6%, slightly less than the expected decline of 2.7% and were in negative territory for the 13th consecutive month. China’s PPI was 2.5% in September, suggesting that deflationary pressures in factories are continuing.
“China is still in a deflationary environment. Domestic demand remains sluggish,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
Beijing has provided targeted policy support even as recent data suggested growth remained sluggish. Another negative factor affecting consumer confidence is the ongoing debt crisis at two of China’s largest real estate developers. China’s real estate sector accounts for about 30% of the Chinese economy.
“As the fiscal deficit increases and real estate developers may receive support from the government, domestic demand is likely to improve next year,” Zhang said.
Investors will now watch this year’s Singles Day shopping festival, which ends on November 11, to gauge the strength of Chinese consumption.
But the anticipation for the shopping festival has waned.
“I think this year’s Singles Day sale fell short of expectations,” Hao Hong, partner and chief economist at Grow Investment Group, told CNBC’s “Squawk Box Asia.”
“Since last year, people don’t spend much money on Singles Day sales, so it will be a subdued sales year,” Hong said.