China's Clear Economic Slowdown... November PPI Negative for Second Consecutive Month

Food Prices Surge... Pork Up 34%
PPI Downward Pressure... Key Sectors Like Chemical Manufacturing Decline

[Image source=EPA Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] China's economy, which had tightened quarantine measures due to the resurgence of COVID-19, continued to slow down last month. The zero-COVID policy made normal economic activities difficult, increasing downward pressure on prices.

On the 9th, China's National Bureau of Statistics announced that the Consumer Price Index (CPI) in November rose 1.6% year-on-year. This is a slower increase compared to the previous month (2.1%) and matches experts' forecasts (1.6%). Compared to the previous month, it fell by 0.2%, and the cumulative CPI from January to November rose 2.0% year-on-year.

Food prices increased 3.7% year-on-year. Pork prices, which greatly affect the perceived inflation within China due to high demand, surged 34.4%, while eggs (10.4%), fresh fruits (9.6%), and poultry (8.5%) also saw significant increases. Non-food prices rose 1.1%, and the core CPI, excluding food and energy prices, increased 0.6% year-on-year, maintaining the same level as the previous month.

The Producer Price Index (PPI) for the same month fell 1.3% year-on-year, unchanged from the previous month. Although slightly better than market expectations (-1.4%), it showed a decline for two consecutive months. Among the 40 industries surveyed, 15 experienced price decreases, while 25 showed increases.

By industry, the manufacturing of chemical raw materials and chemical products fell 6.0%, widening the decline, and chemical fibers dropped 3.7%. The smelting and rolling processing of ferrous metals fell 18.7%, and non-ferrous metals smelting and rolling processing fell 11.5%. On the other hand, the PPI related to petroleum and natural gas mining rose 16.1%, and the agriculture and food processing industry increased 7.9%. It is estimated that the carryover effect of last year's price changes accounts for about -1.2 percentage points of the total PPI decline, while the impact of new price increases is about -0.1 percentage points.