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China's consumer inflation further eases amid falling food prices

Pub Date:2020-11-11 08:59 Source:Xinhua

China's consumer inflation eased for a third straight month and hit an 11-year low in October as food prices tumbled, official data showed Tuesday.

The consumer price index (CPI), a main gauge of inflation, rose 0.5 percent year on year last month, narrowing from the 1.7-percent rise in September, according to data from the National Bureau of Statistics (NBS).

On a monthly basis, consumer prices dropped 0.3 percent. Food prices, which account for nearly one-third of China's CPI, went down 1.8 percent last month.

Dong Lijuan, a senior statistician with the NBS, attributed the tamed inflation to the drop in food prices, especially eggs, vegetables and pork.

In breakdown, pork prices fell 7 percent last month, a further decline of 5.4 percentage points than September, as hog production capacity continues bouncing back, and pork supply keeps improving.

Prices of eggs and vegetables dropped 2.3 percent and 2.1 percent respectively from September amid abundant supply.

Dong said that the high base of comparison in the same period last year, waning carry-over effect, and the falling pork prices have led to the further decline in year-on-year CPI growth.

On a yearly basis, the prices of pork fell for the first time after growing for 19 consecutive months, dropping 2.8 percent, according to Dong.

Though last month's headline inflation hit a record low since October in 2009, analysts with Nomura, a financial service firm, dismissed "unwarranted" concerns over disinflation or deflation in China.

"The decline in CPI inflation does not mean China is experiencing disinflation or deflation, as the drop was mainly driven by pork prices, which was due to the high base as a result of African Swine Fever, sequentially weaker pork prices, and the increased weighting of pork in the CPI basket," said an e-mailed research note by the firm.

"Excluding the pork, CPI inflation actually bottomed out in July at 0.4 percent year on year and remained stable at 0.7 percent between August and October," the note added.

Analysts with Huatai Securities expect the trend of reflation to remain intact in China, and the headline inflation to pick up by the end of the first quarter of 2021 given the recent recovery of consumer demand and the accelerated development in vaccines against COVID-19.

China's producer prices continued to fall in October, but the decline kept unchanged from the previous month amid a recovery in industrial activities, official data showed Tuesday.

The producer price index (PPI), which measures costs for goods at the factory gate, fell 2.1 percent year on year last month, data from the NBS showed.

Affected by downward international prices of crude oil, the sub-index for the oil and gas extraction industry went down 4.9 percent from the previous month, Dong said.

Since the third quarter, Chinese enterprises have seen improvement in cash flow and profitability, said the Huatai Securities, adding that continued recovery of PPI in China is expected in the coming months, and may accelerate in the first quarter of next year.


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