China’s inflation cooled in October amid falling food prices

China’s low consumer inflation is being driven by falling food prices while rising producer costs could lift inflation toward 2027.

• Headline CPI inflation fell to 0.7% year on year in October from 0.9% in September, below the 0.8% market and ING forecasts, bringing year-to-date inflation to 0.9%.
• Food prices reached a 13-month low of -2.9%, led by fresh vegetables at -16.9%, pork at -8.6%, and fresh fruit at -3.8%.
• Non-food inflation held at 1.5%, supported by transportation fuels at 20.2% and communication appliances at 16.1%, while healthcare rose 2.4%.
• Core inflation declined to a nine-month low of 0.8% and remained within a 0.8% to 1.2% range during the year.
• PPI inflation climbed to 5.7%, with mining and excavation prices up 27.9%, raw materials up 11.6%, coal mining up 36.6%, and oil and gas extraction up 35.0%.

Takeaway: Consumer inflation should remain low but positive as food prices weigh on CPI, while sustained producer-price increases could eventually pass through to households ahead of 2027.