China factory prices falter, while inflation soars to near eight-year high

China’s producer prices fell the most in more than three years in October, as the manufacturing sector weakened on declining demand and a knock from the China-US tariff war, reinforcing the case for Beijing to keep the stimulus coming, reported Reuters.

The producer price index (PPI), seen as a key indicator of corporate profitability, fell 1.6% in October from a year earlier, marking the steepest decline since July 2016, National Bureau of Statistics (NBS) data showed on Saturday. Analysts had tipped a contraction of 1.5% for the PPI.

In contrast, China’s consumer prices rose at their fastest pace in almost eight years, driven mostly by a surge in pork prices as African swine fever ravaged the country’s hog herds. Some analysts say the CPI rise could become a concern for policymakers looking to introduce measures to prop up demand.

However, core inflation – which excludes food and energy prices – pressures remain modest.