China CPI falls beyond forecast amid steeper food price; PPI deflation continues for 36th month

[China economy and financial market growth concept, 3D rendering]
Kagenmi

China's consumer prices dropped 0.3% y/y in September 2025, steeper than market estimates of a 0.1% decline but slightly less than a 0.4% fall in the previous month. On a monthly basis, the CPI inched up 0.1%, missing forecasts of 0.2% after remaining flat in August.

Meanwhile, China’s producer prices fell 2.3% year-on-year in September 2025, easing from a 2.9% drop in the previous month and marking the mildest decline since February, though extending their contraction into a third consecutive year.

This result, which matched market forecasts, suggests that government efforts to address overcapacity and boost activity before the holiday period may be having a marginal stabilizing effect. On a monthly basis, the PPI remained flat, showing no change from August.

China’s food prices declined 4.4% year-on-year in September 2025, after a 4.3% fall in the previous month and marking the eighth straight monthly decrease, amid broad-based falls across categories, with pork prices down further due to abundant supply ahead of the Golden Week holidays, lower production costs, and weak demand.

Core inflation, which excludes food and energy, rose 1.0% y/y, the highest in 19 months, after August's 0.9% gain.

In a separate release, Premier Li Qiang reiterated calls to boost consumption and curb unfair competition among businesses. On the trade front, sentiment remained cautious after President Trump threatened Beijing with a cooking oil embargo in response to China’s soybean boycott.

On Wednesday, 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] climbed 0.3% to above 3,870, while the Shenzhen Component advanced 0.9% to 13,000 on Wednesday, rebounding from the previous session’s losses, 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] rose to around 7.12 per dollar on Wednesday, snapping a three-session decline, as the People’s Bank of China reaffirmed its commitment to maintaining currency stability.

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

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