China Wholesale Inflation Jumps to 5.7% as Consumer Prices Slow Down

Wholesale prices in China climbed at their fastest pace since June 2022. The producer price index rose by 5.7% in October, marking three consecutive months of accelerating growth. The figure surpassed the 5.3% increase forecast by economists surveyed by Reuters.

Mining and Exports Fuel Factory Prices

The acceleration in producer prices stemmed largely from steep price increases across raw materials and mining sectors. Analysts pointed to robust demand from international markets as a major catalyst for the rise in factory gate costs.

Following the publication of the inflation numbers, mainland Chinese equities responded positively. The benchmark CSI 300 index advanced by 0.56%.

Consumer Spending Cools on Real Estate Slump

While factory prices surged, consumer price growth weakened. Consumer inflation decelerated to 0.7% in October after rising for two straight months. This missed the 0.8% projection from Reuters and fell below September’s 0.9% reading.

Core inflation, which excludes volatile food and energy costs, dropped to 0.8% from 1% in the prior month. Although gasoline prices supported consumer inflation, a larger-than-expected decline in food prices counterbalanced those gains.

The divergence between wholesale and consumer metrics reflects uneven economic conditions. China posted stronger-than-expected gross domestic product growth in the third quarter alongside solid September retail sales. However, domestic demand remains soft. Ongoing troubles in the property market continue to depress household sentiment and local government revenues, slowing overall consumer momentum.