The rebound in the Chinese economy continues to have little impact on producer prices as deflation continues to grip the world’s biggest manufacturing sector.
But consumer prices fell to their slowest pace in more than a decade as the heat continued to go out of pork prices.
China’s National Bureau of Statistics said the county’s PPI – or Producer Price Index – fell at an unchanged 2.1% in October against the market forecasts for a 2.0% fall.
The report revealed that on a monthly basis, producer inflation slowed to zero, compared with a 0.1% increase in September.
That’s despite the clear sign of a solid rise in exports in the month, a modest rise in imports, and strong readings on manufacturing activity.
Normally those outcomes would see inflation percolating away at the producer level, but its deflation continues to dominate which suggests companies are finding it hard to regain price control.
Consumers price index slowed to an annual 0.5% in October, the slowest since October 2009 and well under market forecasts of 0.8% and the 1.7% rise in September.
Pork prices fell 2.8% year-on-year in October, marking the first decline after 19 months of sharp increases due to supply constraints.
The sudden slide in consumer prices and the resilience of producer price deflation should be a warning that the rebound in the economy that has been going on since midi-year, is not as firmly anchored as the raw data might think.
The weakness in port prices helps (and they will continue to fall while a huge amount of meat comes onto the market in coming months leading up to the Lunar New Year early next February.
That could see consumer prices go negative briefly is there isn’t a surge in energy or other volatile prices.