China's Producer Prices Rise 5% in September, Highest in Over 4 Years; Consumer Prices Up 0.9%
National Bureau of Statistics Releases September PPI and CPI Data
As international oil and commodity prices rose, China’s producer price inflation last month reached its highest level in more than four years. Consumer price inflation, by contrast, came in below market expectations. Analysts say the surge in raw material prices has increased companies’ production costs, but sluggish domestic demand is making it difficult to pass those costs on to consumers.
China’s Producer Price Index (PPI) rose 5.0% year on year in September, according to the National Bureau of Statistics of China on October 14. The increase exceeded the 4.5% market forecast compiled by Reuters and was the largest since June 2022.
By industry, price increases were particularly pronounced in energy-related sectors, including oil and natural gas extraction (+24.5%), petroleum, coal and other fuel processing (+21.6%), and the manufacture of chemical raw materials and chemical products (+12.1%). Reuters said, “A sharp rise in crude oil and raw material prices, driven by transport disruptions, adverse weather and geopolitical tensions, is adding to cost pressures on manufacturers,” adding that “the pass-through of costs to consumers appears to have remained limited because of weak demand.”
China’s Consumer Price Index (CPI) rose 0.9% year on year in September. That was 0.1 percentage point higher than the 0.8% increase in August, but below the market forecast of 1.0%. The month-on-month increase was also 0.2%, below the market forecast of 0.3%.
Gasoline prices appear to have driven the increase in consumer prices. According to the statistics bureau, gasoline prices surged 16.6% year on year in September, adding about 0.47 percentage point to the overall CPI increase. Meanwhile, core CPI, which excludes volatile food and energy prices, rose 1.0% year on year, unchanged from the previous month.
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Reuters said this suggests that overall inflationary pressures remain limited despite the sharp rise in gasoline prices, and that households remain cautious about consumer spending.
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