Chinese consumer price inflation was a low 1.6 per cent in the 12 months to September, according to that country’s National Bureau of Statistics, highlighting that steam is coming out of the world’s second-largest economy.
That figure was below market expectations, and aided by lower rises in the prices of vegetables and pork, which came in at 10.4 per cent and 17.4 per cent year on year respectively, both down from the previous period.
Non-food inflation slowed to 1 per cent year on year.
More dramatically, the producer price index (PPI), which measures prices received in the industrial sector, was down 5.9 per cent year on year.
HSBC China economist Jing Li said the data showed strong deflation pressures in the Chinese economy.
“PPI has contracted for 44 consecutive months, and so far there are few signs of improvement,” Ms Li said.
“Prices (of) raw materials and processing industries are all in deep contraction.
“Falling commodity prices aside, we believe weak domestic demand is mainly responsible for the disappointing PPI reading.”
The weakest performances were largely in resources-focused industries.
Petroleum and natural gas extractors had the largest price fall, at 40 per cent, while prices for coal miners were 15 per cent lower.
Other miners were also down, ranging from 10 per cent for non-ferrous metals to 20 per cent lower for iron ore miners.
Prices for steel producers were also lower by around 19 per cent.
External balance
Exports fell in the year to September, down 3.7 per cent, although that performance was better than the previous month of August, where the rolling 12-month figure was down 5.5 per cent.
Imports dropped even more substantially, down more than 20 per cent for the 12 months to September.
HSBC China economist John Zhu said the numbers indicated less negative momentum in China’s exports sector.
“The contraction of exports has been narrowing for three consecutive months, and ordinary export growth rose from contraction territory to positive growth for the first time in (the third quarter),” he said.
“With external demand unlikely to rebound very strongly due to the slow global growth picture, China’s economy will be driven by domestic sources, hence the need for more decisive policy easing in the coming months.
“Imports of major commodities saw deterioration in both volume and value terms indicating continued weakness in domestic demand.”