China's consumer prices experienced the slowest growth in four months in October, despite the government's stimulus efforts.
The consumer price index (CPI) rose by only 0.3% year-on-year, lower than the 0.4% increase expected by economists. This marks the lowest inflation rate since June and indicates ongoing economic challenges.
The producer price index (PPI) also declined, with a 2.9% year-on-year drop in October, affecting sectors such as petroleum, natural gas extraction, and chemical products manufacturing.
Analysts suggest that the recent stimulus package may not provide an immediate boost to economic activity. The Chinese government has implemented stimulus measures to alleviate local government debt burdens, but concerns remain about their effectiveness in stimulating demand and prices in the short term. Additional stimulus measures, particularly tax policies to support the housing market, are expected.
Goldman Sachs projects that consumer inflation will remain low in the upcoming year, while producer prices are not expected to turn positive until the third quarter of 2025. The cautious approach taken by the Chinese government may be influenced by broader geopolitical considerations. The interplay between consumer sentiment, government policy, and global economic conditions will be critical in shaping the trajectory of the Chinese economy.