CHINA PRODUCER PRICES RISE AT FASTEST PACE SINCE 2022

China's producer price index rose 5% year-on-year in September, the fastest increase since June 2022, according to the country's National Bureau of Statistics. The rise was up from 3.8% in August and exceeded the 4.5% increase forecast by economists polled by Reuters. Consumer prices rose 0.9% year-on-year, up from 0.8% the previous month but below the 1% rise economists had expected. The bureau said higher fuel prices contributed to the increase in producer prices. It also pointed to rising costs in the coal sector, linked to increased demand for winter heating, temporary tight supply in major coal-producing regions, and expectations of higher international coal prices.

Dong Lijuan, chief statistician of the Urban Division at the National Bureau of Statistics, said the rise in consumer prices was driven mainly by petrol prices, which climbed 16.6% and added about 0.47 percentage points to the annual CPI figure. She said this was partly offset by a 1.7% fall in food prices, which reduced the CPI reading by 0.29 percentage points. Core CPI, which excludes volatile food and energy prices, rose 1%, according to the bureau's figures. The bureau's data showed consumer inflation remaining in positive territory for a second consecutive month.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the lower-than-expected consumer inflation reading showed domestic demand remained "lacklustre". Hao Zhou, chief economist at Guotai Junan International Holdings, said the stronger producer price figure suggested the economy was gradually moving away from deflationary pressures, though the recovery remained uneven. He said domestic demand was recovering more gradually than the industrial sector. Hao Zhou added that consumer inflation staying in positive territory indicated the deflationary environment seen in 2024 and 2025 "is continuing to fade".