Written by Hei Takahashi and Ryan Wu
BEIJING (Reuters) – China’s consumer inflation unexpectedly eased in September, but producer price deflation deepened, prompting further stimulus to revive weak demand and volatile economic activity. Pressure is mounting on the Chinese government to move quickly.
Finance Minister Lan Huang said at a press conference on Saturday that there would be more “stimulus” this year, but officials gave no details about the size or timing of the fiscal stimulus being prepared. Investors are hoping that deflationary pressures in the global economy will ease. The second largest economic power.
According to data released by the National Bureau of Statistics (NBS) on Sunday, the Consumer Price Index (CPI) rose 0.4% year-on-year last month, the lowest in three months, compared with a 0.6% rise in August. It missed the 0.6% rise. This was predicted by a Reuters poll of economists.
The producer price index (PPI) in September fell at the fastest pace in six months, dropping 2.8% from the same month last year (1.8% in the previous month), lower than the expected 2.5% decline.
“China faces persistent deflationary pressures due to weak domestic demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. It will help address the issue.”
Chinese authorities have ramped up economic stimulus in recent weeks to boost demand and meet an economic growth target of about 5.0% this year, but some analysts say the measures are only a temporary relief. However, it points out that strong measures are needed immediately or the economic slump could be prolonged. For next year.
In late September, the central bank announced its most aggressive move since the COVID-19 pandemic, including a number of measures (such as lower mortgage rates) to pull the real estate sector out of a deep multi-year recession. Announced financial support measures.
Analysts and investors are now expecting more concrete proposals to be announced at a meeting of China’s parliament in the coming weeks.
“The scale of fiscal stimulus is important. Decisive action is needed before deflationary expectations become even more entrenched,” Pinpoint’s Chan said.
But many China watchers say the country also needs to tackle deeper structural problems, such as industrial overcapacity and sluggish consumption.
Excessive domestic investment and weak demand have driven down prices, forcing companies to cut wages and lay off workers to cut costs, further deteriorating consumer confidence.
Core inflation, which excludes volatile food and fuel prices, was 0.1% in September, down from 0.3% in August, also suggesting deflationary pressures are building.
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Bruce Pang, chief economist and head of Greater China research at JLL, said the core index has remained low for 20 consecutive months, below 1.0%, reflecting a lack of momentum in prices and the need to stimulate consumption. said.
CPI was unchanged month-on-month, lower than expected 0.4% rise compared to August’s 0.4% rise.
Food prices rose 3.3% year-on-year in September, compared with a 2.8% rise in August, while non-food prices fell 0.2%, reversing the 0.2% rise in August.
In non-food items, the decline in energy prices became more severe, and tourism prices turned from rising to falling due to falling airfares and hotel accommodation costs, NBS said in an accompanying statement.
(Reporters: Qiaoyi Li, Liangping Gao, Ryan Woo; Editing: Kim Coghill)
