Charts of the Day: Consumer, Factory Inflation Both Slow

Consumer inflation slowed in November, driven by declines in food prices, while factory inflation dipped to its lowest level since October 2016 amid weakening domestic demand and dropping international oil prices, government data released on Sunday show.

Graphic: Gao Baiyu/Caixin

The consumer price index (CPI), which measures the prices of a basket of consumer goods and services, rose 2.2% year-on-year in November, slowing from October’s reading of 2.5%, according to the National Bureau of Statistics (NBS) (link in Chinese).

On a monthly basis, the CPI dropped 0.3% in November, down from a 0.4% gain in October. The slowdown was mainly driven by a decline in food prices, which fell 1.2% month-on-month. Prices of vegetables were down thanks to adequate supplies and pork prices lowered as a result of accelerating pork production amid risks from African swine fever, NBS analyst Sheng Guoqing said in a statement (link in Chinese).

Nonfood prices saw a slight fall of 0.1% from October, with the sharp drop in international oil prices being the main drag, analysts with China Merchant Securities said in a note. Vehicle fuel prices decreased 4.8% month-on-month, according to government data.

Graphic: Gao Baiyu/Caixin

Year-on-year growth in the producer price index (PPI), which tracks changes in the prices of goods circulated among manufacturers and mining companies, fell to a 25-month low of 2.7% in November, down from 3.3% in the month before, according to the NBS (link in Chinese).

On a monthly basis, the PPI fell 0.3%, down from October’s gain of 0.6%.

Analysts said falling international oil prices and lackluster domestic demand were behind the slowdown in factory inflation in November. “The biggest uncertainty of the subsequent PPI downside may still be the price of crude oil,” analysts with China Merchant Securities said.

Over the first 11 months of this year, the CPI and the PPI rose 2.1% and 3.7% year-on-year, respectively. Both growth rates were in line with government estimates. Central bank Governor Yi Gang expected the CPI for all of 2018 to grow slightly more than 2%, and the PPI to grow between 3% and 4%.

Contact reporter Charlotte Yang (yutingyang@caixin.com)