China’s factory-gate inflation hits highest since 2022

China's producer prices rose 5.7% in October from a year earlier, the fastest pace in nearly four and a half years, while consumer inflation slowed to 0.7%. The figures, released Monday, November 9, show the gap between rising costs for factories and weak demand from households getting wider.reuters.com

The producer price index (PPI) rose from 5.0% in September and beat the 5.3% forecast in a Reuters poll, according to National Bureau of Statistics data reported by Reuters. It was the largest annual rise since June 2022, when the PPI climbed 6.1%. It was also the third straight month that producer inflation sped up.cnbc.com+2

Energy drives upstream prices

Compared with a year earlier, prices rose 36.6% in coal mining and 35.0% in oil and gas extraction, while petroleum and coal processing rose 29.9%, according to the statistics bureau's analysis. From September to October, the PPI rose 0.7%, slower than the 1.2% monthly gain the month before. Six energy-related industries made up more than 80% of that monthly rise. Bureau statistician Dong Lijuan pointed to higher international energy prices, seasonal demand for heating fuel, and growing demand linked to artificial intelligence, according to Xinhua via People's Daily. Zhang Zhiwei, chief economist at Pinpoint Asset Management, told CNBC that "very strong external demand" was behind the increase.stats.gov.cn+2

Consumer prices lose momentum

The consumer price index (CPI) slowed from 0.9% in September and missed the 0.8% forecast. Prices were unchanged from the previous month. Core inflation, which leaves out food and energy, eased to 0.8% from 1.0%, its slowest pace in nine months (CNBC; China Labour Bulletin).clb.org.hk+2

Food prices fell 2.9% from a year earlier, a steeper drop than in September. Fresh vegetables fell 16.9% and pork fell 8.6%. Gasoline prices jumped 22.4%, which added about 0.63 percentage points to the headline CPI, the bureau said. Prices for data storage devices, tablets and computers also rose sharply.stats.gov.cn

A widening divergence

Little of the rise in upstream costs has reached consumer goods prices, Caixin reported, calling the split between upstream and downstream prices a "widening divergence." Consumer prices rose 0.9% over the first 10 months of 2026, according to China's state news agency Xinhua. That leaves policymakers with factory costs pushed up by energy and household demand that remains weak.english.www.gov.cn+1