China’s consumer prices fell at fastest pace in three years in Nov, factory-gate deflation deepened
DATA MACRO
China’s consumer prices fell at fastest pace in three years in Nov, factory-gate deflation deepened
DATA MACRO

China’s consumer prices fell at fastest pace in three years in Nov, factory-gate deflation deepened

 

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China’s consumer prices declined at the fastest pace in three years in November, while factory-gate deflation deepened, suggesting intensified deflationary pressure as weak domestic demand casts doubts over the economic recovery.

China’s consumer price index (CPI) fell by 0.5% both from a year earlier and compared with October, according to data from the National Bureau of Statistics (NBS) on Saturday. That marked the steepest year-on-year decline since November 2020, compared to the 0.2% drop in the previous month.

China’s core inflation, excluding food and fuel prices, grew by 0.6% year over year in November, in line with that in October, showed the data.

Consumer prices entered deflationary territory in July and briefly rose in August before falling again in October. The deflationary trend adds to an array of economic pressures facing the country’s policymakers, including a liquidity crunch in the property sector, weak trade data and a slowing recovery from three years of zero-Covid lockdowns.

The faster CPI decline was mainly attributable to the fact that energy prices returned to year-on-year declines in November, said Dong Lijuan, chief statistician at the NBS.

Consumer prices have been affected this year by declining pork prices, an important constituent in the basket of goods in China’s consumer index. Food prices fell by 4.2% in November and in particular, pork prices slid 31.8%, widening by 1.7 percentage points from the previous month.

China’s factory-gate deflation deepened in November, with the producer price index (PPI) falling 3% from a year earlier, widening from a 2.6% drop in the previous month, according to the data.

That marks the 14th straight month of decline and the steepest fall since August.  It compares to a 2.8% fall predicted by analysts in a Reuters poll.

The faster drop in PPI was mainly driven by falling global crude oil prices and weak demand for some industrial products, said Dong.

The prices in the oil and natural gas exploring industry fell 3.3% in November from a year earlier, compared to the 1.7% gain in October, while the prices in the coal mining and coal washing industry, non-metal mineral manufacturing industry, oil, coal and other fuel processing industry fell by 6.35 – 15.8%, according to the NBS.