China's producer prices rise at fastest pace since June 2022, beating expectations — SkimNews
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- China's producer price index climbed 5% year-on-year in September, the fastest pace since June 2022 and above the 4.5% expected by economists in a Reuters poll, up from 3.8% in August.
- Consumer prices rose 0.9%, marginally missing the 1% forecast, with gasoline prices surging 16.6% (contributing 0.47 percentage points) partially offset by a 1.7% drop in food prices.
- China's National Bureau of Statistics attributed the PPI jump to higher fuel costs and coal-sector gains driven by winter heating demand, tight supply in major producing areas, and rising international coal prices.
- Economists split on the read-through: Pinpoint Asset Management's Zhiwei Zhang called domestic demand "lackluster," while Guotai Junan's Hao Zhou said the economy is "gradually moving away from deflationary pressures."
- China's economy is already grappling with its lowest growth rate in over three years, with Q2 GDP missing expectations at 4.3%.
- The State Council signaled on Sept. 28 that more counter-cyclical policy support is coming, a shift ING's Lynn Song said targets a 4.5%-5.0% GDP growth goal for 2026.
Why it matters: A 5% PPI jump signals industrial-side price recovery and easing deflation fears, but the missed CPI forecast reveals that demand-side weakness persists — a split already prompting Beijing to shift tone on stimulus. Policymakers face clear urgency: GDP growth is at a three-year low of 4.3%, and the State Council's late-September readout now explicitly flags more macro support to hit its 4.5%-5.0% 2026 target.
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