Shoppers select vegetables at a supermarket in Jiujiang, Jiangxi Province. (Photo by Hu Guolin/For China Daily)
Increase mainly caused by food price rises due to seasonal factors, says NBS
The nation's consumer price index, a gauge of the prices of goods and services, rose by 2.5 percent year-on-year in September. Analysts said consumer inflation in the fourth quarter is expected to be mild, but China should get prepared for the effect of possible spikes in international oil prices on domestic inflation.
CPI growth last month was 0.2 percentage point higher than in August, according to data released by the National Bureau of Statistics on Tuesday. It was the highest level in seven months. In month-on-month terms, it rose by 0.7 percent.
The rise in CPI is mainly caused by food price rises due to seasonal factors and natural disasters, such as extreme weather, which pushed up vegetable prices, the bureau said in a statement.
Heavy flooding in late August in Shouguang, a city in Shandong province, a major center of China's vegetable production, reduced the supply of vegetables and fruit and pushed up their prices, contributing to 0.35 percentage point of year-on-year CPI growth in recent months, said Li He, an analyst at Bank of China.
In the fourth quarter, the inflation situation is expected to remain stable, Li said. Extreme weather may still have an impact on inflation, but the effect would be short-lived, he said.
But he warned that there may be a risk of surging international oil prices caused by rising geopolitical tensions. He also said that pork prices may surge in some provinces due to the impact of African swine fever.
Hu Yuexiao, chief analyst at Shanghai Securities, said that the rising CPI will not alter the current monetary policy stance for the sake of economic stabilization and financial risk control. "The stance needs to be appropriately loose," he said.
China's CPI may register a mild rise of 2.1 percent this year, up from 1.6 percent in 2017, said a research note from securities firm Nomura. "We expect CPI inflation to moderate over the next couple of months as vegetable prices normalize. We do not expect contained inflation to affect Beijing's policy agenda to stimulate domestic demand and investment."
China's producer price index, which gauges factory-gate prices, eased to 3.6 percent year-on-year in September, down from 4.1 percent in the previous month.
The easing growth is mainly caused by the relatively high base of last September, the statistics bureau said.
In month-on-month terms, it rose 0.6 percent, the fastest this year, caused mainly by China's overcapacity reduction initiative, which reduces supply in some upstream sectors. The spill-over effect of rising international oil prices is also a factor behind the falling PPI growth, Li said.
