China factory inflation growth slows for fourth month as trade war dampens demand

Price increases of goods sold by China’s factories slowed for the fourth straight month in October as the world’s second largest economy faces lower demand for industrial materials amid cooling manufacturing activity exacerbated by a trade war with the US.

The producer price index (PPI), a measure of the rate of change in prices of goods sold by producers at the wholesale level, rose 3.3 per cent in October from a year ago, easing from 3.6 per cent in September, according to data published by the National Bureau of Statistics on Friday.

The slower growth rate matches the median expectation of analysts polled by Bloomberg. On a monthly basis, the PPI rose 0.4 per cent.

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The growth rate of prices paid by consumers was unchanged in October.

The consumer price index (CPI) rose 2.5 per cent, the same rate as in October and matched the median expectation in Bloomerg’s poll. On a monthly basis, the CPI rose 0.2 per cent.

October’s growth rate remained well below the China’s government’s 3 per cent target rate for this year.

China’s economy is growing at its slowest in a decade and there are signs that policymakers are increasingly nervous about the outlook, given the trade war with the US shows little sign of cooling.

So far, there’s been little impact on China’s overall exports data as US importers and Chinese manufacturers have rushed to “front load” the filling of orders for early next year to avoid the higher US tariffs expected to take effect on January 1.

Last month, the Communist Party’s Politburo, the 25-member supreme policymaking body headed by President Xi Jinping, admitted there was “growing downward pressure” on the economy with “profound changes” in the external environment.

In response, the government launched a series of measures to support the economy, including cutting individual taxes, speeding up infrastructure spending and extending additional financing options to help struggling smaller companies.