DgcityPrices charged by Chinese factories rose 5.7 percent in October from a year earlier, their fastest pace in more than four years, while consumer inflation unexpectedly cooled to just 0.7 percent, laying bare the gap between an export-driven industrial boom and cautious spending at home.
The producer-price index has now accelerated for three straight months, driven mainly by energy. Coal-mining prices jumped 36.6 percent and oil and gas extraction costs rose 35 percent, reflecting higher global oil prices amid renewed tensions in the Middle East. Prices of chemicals, non-ferrous metals and electronics components also climbed, with the statistics bureau noting that nine industries alone accounted for more than six percentage points of the overall increase.
For shoppers, the picture was almost the reverse. Food prices fell 2.9 percent year on year, with fresh vegetables down 16.9 percent, pork down 8.6 percent and fruit down 3.8 percent, as favorable weather and ample supply pushed down the cost of the weekly shopping basket. Egg prices, by contrast, rose 12.3 percent. Overall consumer prices were flat compared with September, and core inflation, which strips out food and energy, eased to 0.8 percent.
The one thing consumers did pay more for was fuel and gadgets. Gasoline prices surged 22.4 percent from a year earlier and alone contributed roughly 0.6 percentage points to consumer inflation. Prices of data-storage devices, tablet computers, desktops and mobile phones rose between 17 and 45 percent, a telling sign of how the AI-driven shortage of memory chips and computing hardware is now showing up on Chinese price tags.
The divergence poses a dilemma for policymakers. Producer prices are being lifted by costs set mostly outside China and by strong overseas orders, while domestic demand remains soft enough that factories cannot easily pass those costs on to households. Several economists have described the combination as a form of cost-push inflation that does little for real growth, and warned that if oil prices settle back, deflationary pressure could quickly return.
For the first ten months, consumer prices are up just 0.9 percent on average, far below the kind of inflation that would signal a confident consumer. The figures reinforce expectations that Beijing will keep monetary support targeted at industry and the housing market rather than risk a broad stimulus that could further pressure the yuan and outflow-sensitive asset prices.
