China's consumer prices in October experienced their slowest growth since June, as Beijing intensified its efforts to stimulate the economy. The consumer price index (CPI) recorded a year-on-year increase of 0.3%, as per data released by the National Bureau of Statistics on Sunday. This figure is a decline from September's 0.4% growth and falls short of the anticipated 0.4% rise projected by analysts.
Analyzing the year-on-year metrics, urban prices saw an increase of 0.2%, while rural prices rose by 0.3%. Food prices surged by 2.9%, reflecting a notable shift in consumer spending geared towards essentials. In contrast, consumer goods prices edged up by 0.2%, and service prices climbed by 0.4%, whereas non-food prices experienced a decline of 0.3%.
Despite these efforts, domestic consumer demand remains tepid, prompting the government to announce further economic interventions. Last week, the Ministry of Finance introduced a substantial 10 trillion yuan debt package aimed at alleviating the financial strains faced by the economy. Analysts are cautious about the immediate impact of these measures.
Lynn Song, chief economist for Greater China at ING, noted that while the current stimulus sets a foundation for additional measures, these initiatives might take some time before they fully materialize. In a note dated November 8, Song emphasized that the government has signaled intentions to adopt a more 'forceful fiscal policy' in 2025.
Looking ahead, Song expressed that markets are likely to continue on the lookout for policies aimed at revitalizing consumption. However, she cautioned that such initiatives may typically be actioned at the local level rather than nationally. Possible strategies could include expanding trade-in programs, enhancing consumption vouchers, adjusting tax brackets, or offering tax incentives to stimulate spending..