China’s headline inflation remained flat in September, primarily due to a significant decrease in pork and vegetable prices, as well as the impact of high base effects.
Consumer Price Index
According to the National Bureau of Statistics, the consumer price index showed no change compared to the previous year. In August, there was a marginal increase of 0.1%. However, this reading fell below the expectations of economists in a recent Wall Street Journal poll, who had predicted a 0.2% rise.
Impact on Food Prices
In September, food prices experienced a 3.2% decline compared to the same period last year. This drop was more substantial than the 1.7% decline witnessed in August. The statistics bureau attributed this decrease in food prices to the comparatively high base figures from the previous year. Among the food items, pork and fresh vegetables recorded significant declines, with a 22.0% and 6.4% drop respectively. These two categories accounted for almost 90% of the overall decrease in food prices.
In contrast, non-food prices saw a slight increase of 0.7% in September, compared to a 0.5% rise in August.
China’s core CPI, which excludes volatile food and energy prices, remained consistent at a 0.8% increase compared to the previous year. This level has been maintained for three consecutive months.
Monthly Basis Variations
On a monthly basis, China’s CPI rose by 0.2% in September, slightly lower than the 0.3% growth observed in August.
Producer Price Index
Meanwhile, producer prices continued to experience deflation; however, the pace of decline slowed down. In September, China’s producer price index fell by 2.5% compared to the same period last year. This was a milder drop than August’s 3.0% decrease. The survey conducted by the Wall Street Journal had projected a decline of 2.4%.