China’s inflation data show economy in doldrums despite trade improvement

China’s economy is still in a doldrums, with prices decreasing owing to weak demand from consumers and companies, data showed.

Consumer prices stayed steady in September compared to the previous year, according to the National Bureau of Statistics, but wholesale prices declined 2.5%. Last month, both exports and imports declined as demand fell in outside markets.

The slow recovery of the world’s second-biggest economy from the shocks of the COVID-19 outbreak is weighing on regional and global GDP, while experts believe the worst is gone. Trade increased marginally from the previous month, and manufacturing is improving.

The International Monetary Fund reduced its growth projection for China earlier this week, anticipating 5% growth this year and 4.2% growth in 2024, down marginally from its July forecast.

The IMF attributed the negative revision to lower consumer confidence, reduced global demand, and a property sector crisis that has hampered economic activity.

China is scheduled to release economic growth figures on October 18, with experts expecting the economy to grow at a 4.4% annual rate in July–September, down from 6.3% in the previous quarter.

According to data, food costs fell 3.2% in September, with the price of pork falling 22% from a year ago, a bigger reduction than the 17.9% drop in August.

Core inflation, which excludes food and energy prices, is up 0.8% year on year, according to the statistics office, matching the 0.8% increase in August.

Domestic consumer demand has recovered considerably more slowly than expected, and excessive competition has resulted in price wars in several areas.

China’s producer pricing index, which monitors the rates producers charge wholesalers, has been falling for a whole year, but it decreased more slowly last month than in August.

China’s industrial sector is showing indications of recovery. According to a study of plant managers, activity has resumed its upward trend. The official purchasing managers’ index climbed to 50.2 in September from 49.7 in August, the first time it has crossed 50 in six months. A value above 50 shows an increase from the previous month.

According to the China Passenger Car Association, car sales in China increased 4.7% year over year in September. Passenger car sales totaled 2.04 million units. The expansion occurred before China’s long Mid-Autumn and National Day vacations in October. It’s often a busy period for auto dealers as people buy vehicles ahead of the week-long national holidays.

And the real estate industry is stumbling through difficulties caused by a crackdown on high borrowing by developers, which has hampered many home construction projects.

China’s worldwide commerce remained subdued in September, with both exports and imports decreasing year over year.