China's September CPI Rises 0.4%... Up 8 Consecutive Months but Growth Slows

China's consumer price index (CPI) increase in September fell short of market expectations.

According to the National Bureau of Statistics of China on the 13th, the September CPI rose 0.4% year-on-year. This was below the forecasts of Reuters (+0.6%), Bloomberg (+0.6%), and Chinese economic media Caixin (+0.6%).

China's CPI has been rising for eight consecutive months since turning positive six months ago in February due to the Spring Festival (Chunjeol) effect, increasing 0.7% year-on-year at that time.

In September, food prices led the rise with a 3.3% increase year-on-year, while non-food prices fell 0.2%. Consumer goods prices rose 0.5%, and service prices increased 0.2%. Among food items, vegetable prices surged 22.9%, with pork (+16.2%) and fruit (+6.7%) prices also rising. Prices of eggs (-4.1%) and grains (-0.7%) declined.

Li Juan, chief statistician of the Urban Department at the National Bureau of Statistics, explained, "Due to factors such as the school opening season coinciding with the Mid-Autumn Festival (Chuseok), prices of vegetables, eggs, fruit, and pork increased among food items," adding, "With the end of summer and reduced outings, prices for airline tickets, accommodation, and travel fell by 14.8%, 7.4%, and 6.3%, respectively."

On the other hand, the producer price index (PPI) in September fell 2.8% year-on-year, marking the longest continuous decline of 24 months since 2016. The PPI decline was larger than the forecasts of Reuters (-2.5%), Bloomberg (-2.6%), and Caixin (-2.5%).

China's PPI, which recorded declines of -3.0% in both August and November last year, continued to fall in the 2% range this year: -2.5% (January) → -2.7% (February) → -2.8% (March) → -2.5% (April). Subsequently, the decline narrowed somewhat to -1.4% in May, -0.8% in June and July, and -1.8% in August, but in September it recorded the largest drop of the year again.

The Chinese authorities have announced various stimulus measures to achieve this year's economic growth target of around 5%. Just before the National Day holiday (October 1?7), on the 24th of last month, the People's Bank of China (central bank) unveiled a monetary policy package including a 0.5 percentage point cut in the reserve requirement ratio (RRR), provision of 1 trillion yuan (approximately 190 trillion won) in long-term liquidity, cuts in policy interest rates and real estate loan rates, and funds to stabilize the stock market.