October 2024 CPI rose 0.3% year-on-year, down from 0.4% in September, and below economists’ median expectations of 0.4%:
Shows continued weak consumer demand and keeps deflation concerns active. China faced deflation for four months at the end of 2023.
On the PPI:
Factory-gate prices -2.9% in October, falling from September’s -2.8% and much worse than economists’ median expectations of -2.5%the deflationary trend in wholesale prices has continued since late 2022
Government Response:
Lawmakers announced a plan to address local government debt on Friday: China’s top lawmakers approve plan to swap local government debtMarkets were not pleased (as usual): Chinese yuan falls as NPC announcement lacks oomph so farMore broadly: The optimism in the Chinese market yesterday was bafflingEarlier measures in September included:
Interest rate cutsRelaxed home purchasing restrictionsPremier Li Qiang expressed confidence in meeting 5% growth target for 2024
The background to all this are the economic challenges the country faces:
Property crisis persisting, and persisting. This is impacting consumer confidenceSlowest economic expansion in 18 months during Q3Potential future concerns about U.S. tariffs under possible Trump presidencyThere are suggestions, which seem well-founded, that there is need for more consumer-focused stimulus measures. Botyh to boost domestic demand and avoid adding to industry overcapacity pressure, which is contributing to deflaton pressure.
This article was written by Eamonn Sheridan at www.forexlive.com.
