China consumer inflation rises 0.2% Y/Y, core CPI hits 20-month high, PPI decline slows

[Word inflation on Chinese flag]

China's consumer price index showed unexpected strength in October 2025, rising 0.2% year-over-year (Y/Y). This increase defied market expectations for no change and marked a significant rebound from the 0.3% decline recorded in September, signaling the first positive consumer inflation reading since June and the fastest pace since January.

Meanwhile, deflationary pressure at the factory gate continued to ease. China’s Producer Price Index declined 2.1% Y/Y in October. While this extends the contraction for a 37th consecutive month, the decrease was softer than both September's 2.3% drop and the market forecast of a 2.2% fall. On a monthly basis, the PPI registered a slight 0.1% increase after being flat in September.

Core inflation, which strips out volatile food and energy costs, also accelerated, rising 1.2% Y/Y. This was the highest growth rate seen in 20 months, up from 1.0% in the prior month. On a monthly basis, consumer prices rose 0.2%, maintaining momentum and reaching a three-month-high.

Within the CPI data, food prices fell 2.9% Y/Y, which represents an easing from the 4.4% drop in September. Despite marking the ninth straight monthly decline, it was the smallest decrease since July.

Separately, China has suspended its ban on approving exports of “dual-use items” related to gallium, germanium, antimony, and super-hard materials to the United States, the Commerce Ministry said on Sunday.

On Monday, the Shanghai Composite [https://seekingalpha.com/symbol/SHCOMP?source=section%3Asearch_bar%7Ccontent_type%3Aall%7Csection_asset%3Asearch-basic%7Csearch_item%3Ashcomp%7Crow_num%3A1%7CURL_first_level%3Anews%7Ctopic%3Asymbol] fell 0.1% to around 3,995 while the Shenzhen Component lost 0.4% to 13,350 on Monday, with mainland stocks sliding for the second straight session as stronger-than-expected inflation data dampened hopes for near-term policy support, and the offshore yuan [https://seekingalpha.com/symbol/USD:CNY#source=url_first_level%3Amarket-news%7Csection%3Aglobal%7Csection_asset%3Afull_story%7Cbutton%3Abody_link] remained around 7.12 per dollar, trading in a sideways range.

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Currency: (CNY:USD [https://seekingalpha.com/symbol/CNY:USD])

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