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Investing.com-- Chinese consumer price index inflation picked up in October on some support from the Golden Week holiday, while producer inflation shrank slightly less than expected.
But the print still showed China’s deflationary trend in play, with PPI also shrinking for more than three consecutive years.
CPI grew 0.2% year-on-year, government data showed over the weekend. The print beat expectations that inflation will remain flat, and picked up from a 0.3% contraction in the prior month.
CPI also grew 0.2% month-on-month.
The print was China’s first positive CPI reading since June, and was driven chiefly by increased spending during the Golden Week holiday in early-October. Consumers were seen spending more on discretionary items and travel, while key shopping events– specifically the Singles Day event– also boosted spending.
But the pick-up in CPI inflation came amid years of rampant deflation in the country, with heightened economic uncertainty and weak output prices still remaining in play. Increased trade tensions with the U.S. added to this trend.
On the producer front, producer price index inflation shrank 2.1% y-o-y in October, less than expectations for a 2.3% decline.
While the print benefited from some output curbs in China, it still marked a 37th consecutive month of factory gate deflation. China’s massive manufacturing sector has been steadily declining over the past three years, with recent purchasing managers readings for October also signaling little improvement.
Beijing has pledged to dole out more stimulus measures to support growth in the coming months. Improving trade relations with the U.S. are also expected to help.