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China’s Consumer Inflation Hits 29-Month High in September; Pressure Will Ease, Analysts Say 2022-10-16
China’s Consumer Inflation Hits 29-Month High in September; Pressure Will Ease, Analysts Say
China’s consumer price index, a gauge of consumer inflation, increased at the fastest clip since May 2020 in September, driven up by big jumps in the price of pork and fresh produce. But inflation should stay within 3 percent this year as there is weak demand, analysts said.
In September, the CPI climbed 2.8 percent from a year earlier, according to data released by the National Bureau of Statistics today. This is 0.3 percentage point higher than in August and on par with an estimate of 2.84 percent by a Yicai Global poll of chief economists.
Food prices surged 8.8 percent last month from a year earlier, 2.7 percentage points more than in August, and pushing the CPI up by around 1.56 percentage point, the NBS said.
Pork prices soared 36 percent over the period, 13.6 percentage points more than in August, while the prices of fresh fruits and vegetables gained by 17.8 percent and 12.1 percent, respectively.
Core CPI, which excludes food and energy prices, advanced 0.6 percent in September year on year, 0.2 percentage point less than in August.
Although hog prices will continue to climb in the short term, CPI growth will be restricted by a number of factors, Orient Securities said in a research report. The weight of hog prices in the CPI will fall in months to come, demand for services and some commodities is weaker than before the pandemic and the core CPI is sluggish. So inflation pressure will stay mild, it added.
While the CPI has been much higher in the second half than in the first half, it has not exceeded 3 percent growth and so inflation is still under control, Pang Ming, chief economist and head of research at Jones Lang LaSalle Greater China, told Yicai Global.
Pork prices could come down quickly once more hogs are put on the market, experts said. There isn't a shortage of pigs, as the number of reproductive sows, new piglets and mature hogs has been rising for months. Rather, many hog breeders are holding onto their stock, hoping that prices continue to rise or to keep fattening them up, leading to a shortage in supply.
Factory Prices
The growth of the producer price index, which is a measure of industrial profitability, slowed in September as crude oil and other commodity prices fall even though there was an uptick in industrial demand in China.
The PPI climbed 0.9 percent last month year on year, 1.4 percentage point less than in August and close to the 0.97 percent predicted by the Yicai Global survey.
Interest rates are rising around the world, so demand is certain to fall and this will bring down commodity prices, said Luo Zhiheng, chief economist at Yuekai Securities. In the months to come, international oil prices and China’s coal prices will come under pressure to increase due to supply tensions, but metals prices will slide because of weak demand.
Source:Yicai
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