BEIJING — China's producer prices rose further in October while consumer inflation cooled, reflecting persistent cost pressures from higher oil prices despite weak domestic demand, Reuters reported on Monday, November 9, citing data from the National Bureau of Statistics (NBS).

Source: Reuters

The producer price index (PPI) climbed to 5.7% last month from a year earlier, compared with a 5.0% increase in September, beating economists' forecasts for a 5.3% gain in a Reuters poll. CNBC reported the rise was the fastest since June 2022 and the third consecutive monthly acceleration, driven by mining and raw materials.

Source: Reuters

5.7%Producer price inflation, Oct (year on year)
0.7%Consumer price inflation, Oct (year on year)
5.3%Economists' PPI forecast (Reuters poll)
-2.9%Food prices, Oct (year on year)

Consumer inflation, as measured by the consumer price index (CPI), stood at 0.7% year-on-year, versus a 0.9% rise in September and below economists' expectations for a 0.8% increase — its first deceleration after two straight months of increases. On a monthly basis the CPI was unchanged, matching forecasts, after edging up 0.2% in September. Core inflation, which strips out volatile food and energy prices, eased to 0.8% from 1.0%.

Source: Reuters

Food is doing the cooling, energy is doing the heating

Dong Lijuan, chief statistician of the NBS's urban department, said food prices fell 2.9% year-on-year in October — a decline 1.2 percentage points steeper than the prior month — pulling the CPI rate down by about 0.49 percentage points and serving as the main force suppressing consumer prices, even as gasoline prices pushed the other way. ING's analysts noted food prices hit a 13-month low, while non-food inflation was unchanged at 1.5%.

Source: NBS figures via BigGo Finance

On the factory side, producer goods prices rose 7.4%, with mining up 27.9%, raw materials up 11.6% and processing up 3.5%, while prices of consumer goods at the factory gate fell 0.1%. The steepest industry rises were coal mining and washing, up 36.6%, and oil and natural gas extraction, up 35.0%, followed by petroleum and fuel processing at 29.9% and chemical raw materials at 16.4%. Dong said rising international energy prices also drove October's monthly PPI gain of 0.7%, with domestic oil and gas extraction prices up 6.0% on the month and coal mining up 2.7%.

Source: NBS figures via BigGo Finance

The result is a widening gap of around five percentage points between what producers pay and what consumers pay. Analysts describe that as a margin squeeze rather than a consumer-price problem: factories absorb war-driven energy costs they cannot pass on while household demand stays soft. Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, attributed the producer-price surge partly to robust external demand for Chinese goods.

Source: CNBC reporting via DataStreet

October's figures extend the pattern set in September, when producer inflation reached 5.0% — already a four-year high at the time — on surging coal and oil extraction prices, while consumer inflation stayed below 1%. The energy link runs back to the war in the Gulf, which kept oil prices high through October and fed straight into China's industrial input costs.

Source: ING

What happens next

Attention now turns to China's October trade data, due on Tuesday, November 10, which will show whether export strength can keep offsetting sluggish domestic demand, with credit and money-supply figures later in the week. If producer prices hold at these levels, analysts say some of the cost pressure should eventually reach consumers — ING expects inflation to stay low but positive heading into 2027.