China’s Consumer Price Index (CPI) returned to positive territory in October, rising 0.2% year-on-year after two consecutive months of deflation, according to data cited by UOB Group Economist Ho Woei Chen. The reading beat Bloomberg’s forecast of -0.1% and follows a 0.3% decline in September.
Core CPI, which excludes food and energy prices, strengthened to a 20-month high of 1.2% y/y from 1.0% previously, reflecting firmer underlying demand. Services inflation also picked up to 0.8% y/y (from 0.6%), while consumer goods deflation moderated to -0.2% y/y from -0.8% in September.
Ho noted that October’s improvement was supported by stronger holiday-related demand for hotel stays, airfares, and tourism services, alongside a low base effect from the previous year. On a monthly basis, prices rose 0.2% m/m, up from 0.1% in September, driven by a 0.2% rebound in services and a 0.3% rise in food prices.
Food price deflation eased to -2.9% y/y from -4.4%, as declines in key items moderated — including pork (-16.0%), eggs (-11.6%), fresh vegetables (-7.3%), and fruits (-2.0%) — while aquatic product prices increased by 2.0% y/y.
Meanwhile, Producer Price Index (PPI) deflation narrowed for the third straight month to -2.1% y/y in October, slightly better than expectations of -2.2%, marking the 37th consecutive month of contraction.