Deflation pressures in China alleviated in October, as consumer prices returned to growth after falling for two straight months, though producer prices extended their slump to three years as the world’s second largest economy suffers from weak domestic demand and a decline in exports.
Data from China’s National Bureau of Statistics released Sunday showed consumer price index reading for October at 0.2%, compared with analysts’ expectations of zero, or flat growth year on year. Prices had dropped by a more than expected 0.3% in September.
On a month-on-month basis consumer prices also rose by 0.2%, compared with analysts’ expectations of zero growth.
Food prices, which have been a drag on the country’s CPI, dropped 2.9% year on year. However, prices rose 0.2% over the previous month.
Producer prices in October fell 2.1%, year on year, compared with Reuters’ poll estimates for a 2.2% decline, completing three years in negative territory. This comes a time when the country has been witnessing fierce price wars, warranting government intervention. Industrial overcapacity has further pressured prices. Month-on-month prices rose by 0.1%.
