China's Consumer Prices Rebound Amidst Declining Producer Prices

2025-11-10 economy

Beijing, Sunday, 9 November 2025.
In October 2025, China’s consumer prices rose by 0.2%, ending a two-month decline, while producer prices fell for the third year, highlighting economic recovery complexities.

Consumer Prices: A Reversal of Trends

In October 2025, China’s consumer price index (CPI) increased by 0.2% year-on-year, marking a positive shift from a 0.3% decline in September. This rise in consumer prices was driven by increased demand during the holiday season, including the National Day and Mid-Autumn Festival, which bolstered spending on travel, food, and transportation. Analysts note that non-food inflation accelerated to 0.9% from 0.7% in September, further indicating a strengthening in domestic demand [1][2][3].

Producer Prices: A Continued Decline

In contrast, China’s producer price index (PPI) fell by 2.1% year-on-year in October 2025, continuing a trend of decline that has persisted for three years. However, the monthly PPI increased by 0.1%, suggesting some stabilization in factory-gate prices. This decline in PPI reflects ongoing challenges in the industrial sector, where costs at the factory gate have been pressured by reduced international demand and lower commodity prices [1][4][5].

Economic Implications and Government Response

The divergent trends in consumer and producer prices highlight the complexities faced by China’s economic policymakers. While the rise in consumer prices suggests a potential easing of deflationary pressures, the continued slump in producer prices underscores the difficulties in reviving industrial activity. China’s leadership has pledged to boost domestic consumption through policy measures, focusing on stimulating demand to offset external economic challenges. This includes initiatives such as expanding consumer trade-in programs and enhancing holiday spending incentives [2][5][6].

Future Outlook and Policy Directions

Looking ahead, economic analysts expect continued recovery in the fourth quarter of 2025, supported by stronger policy stimulus and improvements in consumption and industrial activity. Deutsche Bank has raised its forecast for China’s GDP growth in Q4 2025 to 4.6% year-on-year. Additionally, there is anticipation of further monetary easing, possibly including a rate cut by the central bank, to support growth amid a low-inflation environment [1][6][7].

Sources

China economy consumer prices