China’s consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing ramped up stimulus to support the economy.
In its latest stimulus measures, the country’s top legislature approved a 10 trillion yuan ($1.4 trillion) package on Friday to ease local government “hidden debt” burdens, instead of injecting money directly into the world’s second-largest economy, as some investors had hoped.
Analysts say the package will likely do little to boost economic activity, demand and prices in the near term.
READ MORE: China’s stimulus package has not yet convinced economists. The solution? More stimuli
The consumer price index (CPI) rose 0.3% year-on-year last month, slowing from the 0.4% rise recorded in September and marking the lowest since June, according to data from the National Center for Statistics , falling short of the 0.4% growth forecast in a Reuters poll of economists.
However, core inflation, excluding volatile food and fuel prices, rose 0.2% in October, accelerating from the 0.1% recorded in September.
“Due to the Golden Week holiday in October, the effect of domestic demand-promoting stimulus policies issued since the end of September is not yet obvious,” said Bruce Pang, chief economist at JLL.
He expects the CPI to maintain an upward trend, while core inflation is expected to remain subdued, leaving room for authorities to cut interest rates further early next year.
Producer prices fell 2.9% in October year-on-year, more than the 2.8% drop in the previous month and the expected 2.5% drop. This was the biggest drop in 11 months.
In late September, China’s central bank unveiled the most aggressive monetary support measures since the Covid-19 pandemic to revive economic growth.
