Economists, central bankers, politicians and many in business are wondering why inflation remains weak in major economies. Yesterday we had signs that the recent weakening in inflationary pressures in China might be on the turn.
Consumer price inflation eased last month as the official consumer price index registered year-on-year rise of 1.6%, slowing from the 1.8% annual rate in August.
Food prices fell 1.4% thanks in large part to deflating meat prices. Poultry prices fell 7.5% while the price of the most popular meat, pork, fell 12.4%
Each fall trimmed 0.4 percentage points off the headline reading.
But in month-on-month terms, consumer prices rose 0.5% last month, up from the 0.4% rise in August from July – a sign that inflationary pressures at the consumer level haven’t gone away completely.
Perhaps that tick upwards reflected a jump in producer price inflation (PPI) in the month. The data from the National Statistics Bureau showed an unexpected acceleration in the PPI to a six-month high in September.
Economists blamed the impact of the government crackdown on pollution and smog producing activity such as coal mining and burning (in power stations and cement works), steel making; metal smelting and the like.
The producer price index (PPI) rose 6.9% in September, up from 6.3% in August.
The rise was the strongest since March. Analysts polled by Reuters had expected September producer inflation would be steady from August at 6.3%.
On a month-on-month basis, the PPI rose 1.0% in September. Many commodity prices – iron ore and coal and oil eased or moved sideways in September.
China’s monthly and quarterly production, investment and retail sales data will be out later in the week, along with the GDP figure for the three months to September.
