One of China’s inflation gauges drops for the first time since 2020
China’s producer price index fell year-on-year in October 2022 for the first time since December 2020. Pictured here is a furnace at a steel plant in August 2022 in Jiangxi province.
Zhang Yu | Visual China Group | Getty Images
BEIJING — China’s producer price index fell in October for the first time since December 2020, dragged down by drops in iron and steel prices, according to official data released Wednesday.
The producer price index, which tracks the price of raw materials and other input costs, fell by 1.3% in October from a year ago. That slightly missed expectations for a 1.5% decline, according to a Reuters poll.
The decline comes off double-digit gains last year as commodity prices soared.
In October, measures for ferrous metals, which include iron and steel, and the coal industry saw the sharpest declines within the producer price index.
Changes in China’s producer price index tends to precede similar changes in that of the US by about one or two months, Francoise Huang, senior economist at Allianz Trade, said in October.
While inflation has surged in the US and Europe, China’s consumer price index has remained subdued due to lackluster domestic demand. Stringent Covid controls have dragged down China’s GDP to a 3% pace for the year, as of the third quarter.
China’s consumer price index rose by 2.1% in October from a year ago, below Reuters’ expectations for a 2.4% increase.
Pork, a food staple in China, saw prices surge by 51.8%, while that of fruit rose by 12.6%. However, fresh vegetable prices fell by 8.1%, reversing the prior month’s increase.
Excluding food and energy, the so-called core CPI rose by 0.6% in October — unchanged from the prior month. That had marked the slowest pace since March 2021, according to Wind Information.
China this week reported trade data that showed an unexpected drop in exports last month, dragged down by falling sales of goods to the US and EU. China’s imports also fall, reflecting soft domestic demand.