China’s Factory-Gate Prices Remain in Deflation in November
(Bloomberg) — China’s factory-gate prices contracted again in November while consumer inflation eased as disruptions from Covid outbreaks and restrictions hurt manufacturing activity and reduced demand.
The producer price index fell 1.3% in November from a year earlier after declining by the same magnitude in October, the National Bureau of Statistics said Friday. That compared to economists’ expectations of a 1.5% fall in a Bloomberg survey.
The consumer price index rose 1.6% year-on-year, slowing from a 2.1% gain in October and matching the 1.6% increase projected by economists. Core inflation, which excludes volatile food and energy prices, was unchanged at 0.6%.
Producer prices slipped into deflation in October for the first time in nearly two years as global growth softened and commodity costs continued to slide.
Consumer prices, meanwhile, have been kept in check by Covid disruptions that have depressed movement and spending — a contrast to major developed nations that are battling persistently high inflation.
The subdued inflation this year has left room for policymakers to step up their support for the economy. Economists expect gross domestic product may expand around 3% this year, far lower than a government target given in the spring of about 5.5%.
Record-high Covid infections in November, followed by sporadic outbreaks and movement curbs, likely caused the economy to weaken last month. Both the manufacturing and services sectors took a big hit in the month, early data show, while trade contracted at a steeper pace.
Since then, Beijing has announced several significant steps toward rolling back its strict Covid Zero policy and the government has signaled a focus on economic growth. But a roadmap toward a full reopening remains elusive, and economists have warned that there will be more economic strain as infections rise.
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