Chinese inflation and producer prices grow further in October

Chinese inflation rose in line with expectations in October while producer prices surged past forecasts, data showed on Wednesday.

The consumer price index increased an annualised 2.1% in October following 1.9% growth the previous month, the National Bureau of Statistics said. Growth was driven by a rise in food prices which picked up to 3.7% from 3.2%.

Non-food inflation also edged up to 1.7% from 1.6%.

The producer price index jumped 1.2% year-on-year compared to just 0.1% in September and estimates of 0.8%, boosted by an increase in the price of industrial commodities, including rising coal prices.

“Looking ahead, we think producer price inflation will recover further in coming quarters but will top out at a little over 4% year-on-year before dropping back again,” said Julian Evans-Pritchard, China economist at Capital Economics.

“The scope for further rises in consumer price inflation is likely be more limited given that credit growth has begun to slow, house prices are starting to cool and farmers have responded to high pork prices by boosting pig supply.”