China's inflation data show economy in doldrums despite a slight improvement in trade
China's economy remains in the doldrums, with prices falling due to slack demand from consumers and businesses
China's economy is continuing to struggle with consumer demand waning.
Consumer prices in September were unchanged from the previous year, with 2.5 percent decline in wholesale prices.
Reduced overseas demands have hit exports and imports and China's slow post_COVID recovery is affecting regional and global economic growth.
A slight uptick in trade and marginally improved manufacturing numbers, however, show signs on a recovery, a news agency report said.
The International Monetary Fund (IMF) recently cut China's growth projections to 5 percent for this year and 4.2 percent for 2024, according to a report by the Associated Press.
The revision was based on reduced consumer confidence, falling global demand, and a cisisin the property sector.
All eyes are on economic growth data set for release on Oct. 18, with predictions indicating a 4.4 percent annual growth rate for the July-September quarter.
Food prices in September fell by 3.2 percent. Pork prices saw 22 percent decrease year-on-year.
The August and September core inflation rise remained consistent at 0.8 percent.
While the domestic consumer demand recovery is weaker than anticipated, excessive competition triggering price wars in some sectors, the report adds.
The AP report from Hong Kong adds:
China is due to report economic growth data on Oct. 18 and economists are forecasting the economy grew at a 4.4% annual pace in July-September, down from 6.3% in the previous quarter.
Friday's data showed food prices dropped 3.2% in September, with the price of pork sliding 22% from a year earlier, a steeper decrease than the 17.9% drop in August.
Core inflation, which excludes food and energy prices, rose 0.8% from a year earlier, the statistics bureau said, similar to a 0.8% rise in August.
The recovery in domestic consumer demand has been much weaker than hoped for, and excess competition has provoked price wars in some sectors.
Wholesale price index
“September's inflation data remind us that despite some firming in activity indicators recently, China's economic recovery remains challenged,” Robert Carnell of ING Economics said in a report.
It forecast that consumer inflation will be at 0.5% for all of 2023 and only rise to 1% in 2024.
China's producer price index — which measures prices factories charge wholesalers — has fallen for a full year, though last month it contracted more slowly than in August.
Still, China’s manufacturing sector is showing some signs of improvement. A survey of factory managers showed activity returning to growth. The official purchasing managers’ index for September rose to 50.2 from 49.7 in August, the first time it had topped 50 in six months. A reading above 50 indicates an increase from the previous month.
Car sales in China rose 4.7% in September from a year earlier, the China Passenger Car Association reported earlier this week. Passenger vehicle sales totaled 2.04 million units. The growth came ahead of the China’s long Mid-Autumn and National Day holidays in October. It's typically a bumper time for car dealers as people buy vehicles ahead of the week-long national holidays.
And the real estate sector is muddling through the troubles brought on by a crackdown on heavy borrowing by developers that has hamstrung many home builders.
“The housing market appears to have stabilized recently thanks to the latest round of property easing measures, which could drive a modest recovery in home sales and mortgage demand in the coming months,” Julian Evans-Pritchard of Capital Economics said in a commentary Friday.
China’s global trade remained muted in September, with both exports and imports falling from the same time a year earlier.
Imports and exports both slid 6.2% from a year earlier, although the economy declined at a slower rate compared to August after a slew of policies were released to support the economy.
