Economy

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China's annual consumer inflation rose to 3.8 percent in October 2019 from 3 percent the previous month and above market expectations of 3.3 percent to the highest inflation rate since January 2012 with persistently high pork prices pressuring inflation.

Chinese Vegetables

The high pork prices follow an outbreak of African swine fever this year. Pork is a staple of the CHiense diet. On a monthly basis, consumer prices increased by 0.9 percent in October, the same as in September but higher than market estimates of 0.7 percent.

The politically sensitive food inflation rose to 15.5 percent in October, the highest since June 2008, from 11.2 percent in September,

  • Pork prices soared 101.3 percent, the eighth straight month of increase, after a 69.3 percent gain in September.
  • Cost rose faster for both edible oil (3.3 percent vs 2.3 percent) and eggs (10.4 percent vs 8.2 percent)
  • Pices fell for both fruits fell (-0.3 percent vs 7.7 percent) and fresh vegetables (-10.2 percent vs -11.8 percent).

Core inflation, which excludes food and energy prices pressures remain modest. So if you don;t eat or use energy all is fine!

The Inflation Rate in China averaged 5.13 percent from 1986 until 2019, reaching an all time high of 28.40 percent in February of 1989 and a record low of -2.20 percent in April of 1999. source: National Bureau of Statistics of China

The Inflation Rate in China averaged 5.13 percent from 1986 until 2019, reaching an all time high of 28.40 percent in February of 1989 and a record low of -2.20 percent in April of 1999. source: National Bureau of Statistics of China

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The Producer Price Index

At the same time as consumer prices are soaring the producer price index (PPI) fell 1.6% in October from a year earlier, marking the steepest decline since July 2016, National Bureau of Statistics data showed.  PPI fell as the manufacturing sector weakened on declining demand and a knock from the Sino-U.S. tariff war, reinforcing the case for Beijing to keep the stimulus coming.

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Factory deflation is in line with other indicators showing shrinking manufacturing activity in October, with the official Purchasing Managers’ Index (PMI) indicating contraction for a sixth straight month.

More U.S. tariffs against China are set to take effect on Dec. 15, although officials from both China and the United States had said this week they have agreed to roll back tariffs on each others’ goods if a “phase one” trade deal is completed. Though President Trump says there i no rolling back in the Phase one deal discussed.

The more than year-long trade war has cost China $35 billion as the United States has cut down on Chinese imports, driving up prices for American consumers, according to a U.N. study published on Tuesday.

Surging consumer inflation is adding to the headaches of policymakers who are racing the calendar to meet Beijing’s annual growth target  as it slows to the lower end of a 6%-6.5% range for 2019.

From The Traders Community News Desk

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