China producer inflation beats forecasts as commodity costs rise, CPI lags

BEIJING, Oct 14 (Reuters) – China’s producer prices rose at their fastest pace in more than four years in September while consumer inflation edged up, as higher oil and commodities lifted factory-gate costs even as weak domestic demand kept broader price pressures contained.

The data suggests prices are revving up for manufacturers, but weak consumer demand continues to restrain inflation, reinforcing concerns that China still faces an uneven recovery driven more by exports than spending.

Household spending remains subdued and private-sector confidence fragile despite a series of stimulus measures, underscoring persistent weakness in domestic demand and broader economic imbalances.

The producer price index rose 5% from a year earlier, National Bureau of Statistics showed data on Wednesday, up from 3.8% in August and beating the estimated 4.5% rise in a Reuters poll. That marks the fastest pace of factory-gate inflation since June 2022.

Higher oil and commodity prices, driven by transport disruptions, adverse weather and geopolitical tensions, have increased cost pressures for manufacturers, though sluggish demand has limited the pass-through to consumers.

The consumer price index (CPI) gained 0.9% year-on-year, compared with a 0.8% increase in August, and came in below economists’ forecast for a 1% rise.

Month-on-month, CPI ticked up 0.2%, versus expectations for a 0.3% gain and a 0.4% increase in August.

While consumer prices showed signs of firming, price growth remains muted, suggesting households are still cautious about spending.

Beijing has stepped up support for the economy, approving an additional 550 billion yuan ($82.15 billion) in unused local government bond quota for infrastructure and other spending, adding to measures such as mortgage subsidies.

Core inflation, which excludes volatile food and energy prices, was up 1% on year, unchanged from August.

($1 = 6.6953 Chinese yuan)

(Reporting by Qiaoyi Li and Liz Lee; Editing by Jacqueline Wong)

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