The CPI in October falls, the PPI is negative for the 13th month

Consumer prices in China fell in October as the world’s second-largest economy struggled with an uneven post-Covid recovery.

Data from China’s National Bureau of Statistics released Thursday showed that October the consumer price index fell 0.2% over one year, more than the 0.1% drop expected by economists polled by Reuters.

This comes after China’s CPI remained surprisingly stable in September, highlighting the need for additional policy support.

Production price fell 2.6%, slightly lower than the expected decline of 2.7% and is in negative territory for the 13th consecutive month. China The PPI was at 2.5% in September showed that deflationary pressures in factories persisted.

“China is still in a deflationary environment. Domestic demand remains sluggish,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.

Beijing has provided targeted policy support even though recent data suggests growth has remained sluggish. The lingering debt crisis of two of China’s largest real estate developers is further hurting consumer confidence. China’s real estate sector represents around 30% of its economy.

“With the budget deficit increasing and the government’s potential support for real estate developers, domestic demand is likely to improve next year,” Zhang said.

Investors will now closely follow this year’s Singles’ Day shopping holiday, which ends on November 11, to gauge the strength of Chinese consumption.

But enthusiasm for the shopping festival has waned.

“I think this year’s Singles’ Day sale did not live up to expectations,” Hao Hong, partner and chief economist at Grow Investment Group, told CNBC’s “Squawk Box Asia.”

“Since last year, people have stopped spending a lot of money on Singles’ Day sales, so it will be a year of moderate sales,” Hong said.