MNI ANALYSIS: China's Oct Consumer Inflation Remains Subdued

     BEIJING (MNI) - China's consumer inflation remained elevated in October

while factory-gate inflation slowed for the fourth consecutive month, official

data released by the National Bureau of Statistics on Friday showed.

     --CPI down on food prices

     China's Consumer Price Index held steady at up 2.5% on the year in October,

matching September's outturn and in line with the MNI survey median.

     On a monthly basis, CPI rose 0.2% in October, down from September's 0.7%,

with weaker food prices weighing and rising petroleum products pushing in the

opposite direction.

     Food prices fell 0.3% m/m, reversing a sharp gain of 2.4% in September.

Vegetable prices declined by 3.5% m/m, as autumn and winter varieties arrived on

the market and egg prices fell by 4%.

     The outbreak of African swine flu contributed to a 1% monthly rise in pork

prices. Fruit prices rose 1.9%.

     Non-food items gained 0.3% m/m, unchanged from the pace in September.

Prices of gasoline, diesel, coal and liquefied petroleum gas rose 4.2%, 4.7%,

2.9% and 1.8% respectively, reflecting the global oil price rally seen earlier

in September.

     --Cheaper raw materials ease PPI inflation

     The Producer Price Index was up 3.3% y/y in October, matching the MNI

survey median and decelerating from September's 3.6% against a backdrop of

cooling manufacturing activity and sluggish domestic demand. It gained 0.4% m/m.

     The easing of PPI inflation was partly due to cheaper raw material prices,

according to a CICC report. 

     The purchase price and factory gate price of major raw materials, two

sub-indices of the PMI, dropped by 1.8 and 2.3 percentage points respectively in

October.

     Factory gate prices of crude, coal and other fuel processing production

rose 3.1% m/m, decreasing by 0.9 percentage point from September's 4.0%, with

the international oil price falling back in October.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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