China faces deflation as consumer prices fall for third month
What's the story
China's consumer prices witnessed a 0.3% decline in September, continuing the trend of deflation. The fall comes as a result of domestic economic weakness and renewed trade tensions with the US that have impacted consumer and business confidence. The Consumer Price Index (CPI) data from the National Bureau of Statistics revealed this downward trend, which was slightly higher than the predicted 0.2% drop by economists in a Reuters poll.
Monthly change
Producer Price Index also reflects these economic challenges
In September, the monthly CPI saw a slight increase of 0.1%, a change from August's stagnant figure. However, this was still lower than the predicted 0.2% rise by economists. The Producer Price Index (PPI) also reflected these economic challenges with a year-on-year fall of 2.3% in September, slightly better than August's sharper decline of 2.9%.
Threat
US tariffs pressure Chinese exports
China's producer prices have been falling for nearly three years, squeezing manufacturers amid weak consumer demand and US trade disruptions. Soft domestic consumption and a prolonged housing slump continue to drag on the economy, while US tariffs have further pressured exports. Overall exports have grown this year, but shipments to the US have declined in double digits since April. If President Trump imposes an additional 100% tariff, duties on Chinese exports to America could jump to around 155%.