Markets
China Factory Prices Rose 5.7%, Fastest Since June 2022
China's producer prices rose 5.7% from a year earlier in October, the fastest since June 2022 and above the 5.3% forecast, while consumer inflation slowed to 0.7%.
China's factory-gate inflation accelerated again in October. The producer price index rose 5.7% from a year earlier, the National Bureau of Statistics said on Monday, November 9, up from 5.0% in September, above a consensus of 5.3% and the fastest pace since June 2022. On the month, producer prices rose 0.7%, a slower pace than in September.
Energy did most of the work. Prices in coal mining were up 36.6% from a year earlier, oil and gas extraction 35.0% and petroleum processing 29.9%, and nonferrous metal smelting rose 18.6%. Computer and electronics manufacturing prices rose 5.9%. Statistician Dong Lijuan said energy-related increases were the main driver of the monthly rise, a reflection of the oil shock that followed the start of the Iran war in March.
Consumers saw little of it. The consumer price index rose 0.7% from a year earlier, below the 0.8% expected and down from 0.9%, and was flat on the month. Core inflation, which excludes food and energy, slowed to 0.8% from 1.0%. Food prices fell 2.9% from a year earlier and pork 8.6%, while energy rose 9.9%, with gasoline up 22.4%. Some electronics went the other way: data storage devices cost 45.4% more than a year earlier and mobile phones 16.7% more.
A gap of about five percentage points between producer and consumer inflation means Chinese manufacturers are absorbing much of the rise in their costs rather than passing it to households, which squeezes margins in industries that sell to consumers. It also matters outside China: higher factory-gate prices in the world's largest exporter tend to show up later in the import prices of its customers.
Markets took the release calmly. The Shanghai Composite was up about 0.4% at 3,663.91 in early trading and the Hang Seng about 0.2%, according to the Associated Press. The figures arrive in a week when the US publishes its own October CPI on Tuesday and producer prices on Friday, and with Brent near $98 a barrel after falling more than 16% last week, the energy push in China's November data could already be smaller.