China’s ‘persistent’ deflationary pressure remains: 4 takeaways from November’s data
Consumer prices in China grew by 0.2 per cent in November, while the cost of goods at the factory gate fell for the 26th month in a row
1. Vegetable, fruit prices ease upwards pressure on inflation
Analysts attributed the modest decline mainly to further normalisation of fresh vegetable and fruits prices in the wake of supply disruptions in prior months.
“Headline CPI fell, but this was mainly driven by easing upwards pressure on food prices,” said Gabriel Ng, an assistant economist at Capital Economics as food costs rose by 1 per cent year on year, down from an increase of 2.9 per cent in October.
NBS chief statistician Dong Lijuan attributed the changes to high temperatures and declining travel demand.
On a month-on-month basis, China’s CPI in November fell by 0.6 per cent following a fall of 0.3 per cent in October.
2. Factory-gate price slowdown eases
The slowdown in China’s producer price index (PPI) eased last month, beating expectations and dropping by 2.5 per cent in November, compared with a fall of 2.9 per cent in October.
The gauge, though, fell in year-on-year terms for a 26th consecutive month.
“Deflationary pressures in both upstream and downstream alleviated somewhat,” said analysts at Goldman Sachs.