Vendors in Yiwu, China, are experiencing a shift in the economic landscape as deflation pressures began to ease in October, with consumer prices showing signs of recovery after much of the year spent in negative figures. The latest data from China’s National Bureau of Statistics, released on Sunday, revealed an increase in the consumer price index (CPI) for October at 0.2%. This figure surpassed analysts’ expectations of flat growth and marked the strongest reading for consumer prices since June.
On a month-on-month basis, the CPI also climbed by 0.2%, aligning with forecasts that anticipated no growth. Food prices, which had significantly dragged the CPI down, witnessed a year-on-year drop of 2.9%, yet showed a slight increase of 0.2% compared to September. Additionally, factory-gate deflation appeared to ease, with producer prices declining by 2.1% year-on-year-marginally better than the predicted 2.2% drop. Month-on-month, producer prices rose by 0.1% in October.
Dong Lijuan, chief statistician at the urban division of the National Bureau of Statistics, highlighted that bolstering domestic demand through government policies, along with the boost from the National Day and Mid-Autumn Festival holidays, played a crucial role in this economic uptick. China’s efforts to stabilize prices and stimulate consumer spending seem to be yielding tangible results, reflected in a more than 21% rise in industrial profits in September.
However, experts caution that the reliance of local governments on tax revenue may sustain overproduction and competition, exacerbating existing overcapacity until significant tax reforms are implemented. China’s manufacturing activity faced a steeper decline than anticipated in October, hitting its lowest point in six months, according to an official survey. Key metrics, including production, new orders, raw material inventory, and employment, indicated deepening contractions, suggesting a sharp slowdown in manufacturing output.
The uncertainty surrounding consumer demand has been further intensified by trade tensions with the U.S. and a persistent lack of confidence among domestic consumers as Beijing grapples with an ongoing housing downturn and export challenges. Customs data revealed an unexpected contraction in exports in October, with shipments to the U.S. experiencing a staggering 25% drop-the seventh consecutive month of double-digit declines.
Nonetheless, prospects for stabilizing export conditions emerged following an agreement between U.S. President Donald Trump and Chinese President Xi Jinping during their October 30 meeting in South Korea, where they sought to ease tensions and prevent an escalation of the trade conflict. In the wake of this diplomatic development, Chinese leadership has reiterated its commitment to enhancing domestic consumption in its five-year economic roadmap, emphasizing the necessity to “vigorously boost consumption.”
The meeting readout underscored the importance of balancing consumption with effective investment and adhering to the strategic goal of expanding domestic demand. As these economic shifts unfold, Yiwu’s vendors and the broader market will be closely monitoring the effects on both domestic and international trade dynamics.
— contributing reports by Anniek Bao and Evelyn Cheng, CNBC.
Original Source: https://www.cnbc.com/2025/11/09/china-october-cpi-ppi-deflation-consumer-prices-.html
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Publish Date: 2025-11-09 10:47:00
