YIWU, CHINA – SEPTEMBER 20: A vendor stocks up on fruit at a wholesale market in Yiwu, Jinhua, Zhejiang Province, China (Photo taken on September 20, 2025).
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Deflationary pressures in China eased in October as consumer prices returned to growth after being in negative territory for much of this year, supported by holiday season demand, and the decline in wholesale prices moderated.
The consumer price index was 0.2% in October, according to data released by China’s National Bureau of Statistics on Sunday, compared to analysts’ expectations for zero or flat year-on-year growth. October’s data was the strongest since January this year, with consumer prices registering positive growth for the first time since June.
The CPI also rose 0.2% month-on-month, but analysts in a Reuters poll had expected zero growth.
Food prices, which are a drag on the country’s CPI, fell 2.9% year-on-year. However, it rose by 0.2% from the previous month.
Factory-gate deflation caused prices to fall by 2.1% from the previous year, easing the 2.2% decline predicted by a Reuters survey, ending three years of negative territory. Producer prices in October increased by 0.1% from the previous month.
“Policies aimed at boosting domestic demand continued to be effective in October, helped by tailwinds from the National Day and Mid-Autumn Festival holidays,” Dong Lijuan, chief statistician at the Urban Bureau of the National Bureau of Statistics, said in a statement.
China’s measures aimed at curbing price competition and stimulating demand appear to be bearing fruit, with the country’s industrial profits increasing by more than 21% in September, but until meaningful tax changes are implemented, experts warn that China’s dependence on local governments for tax revenue will drive sustained production, intensifying competition and increasing overcapacity.
China’s manufacturing activity fell more than expected in October, shrinking to its lowest level in six months, according to an official survey released on October 30. Sub-indices for production, new orders, raw materials inventories and employment all contracted deeper, indicating a sharp slowdown in manufacturing.
Chinese producers have struggled this year with demand uncertainty due to weak domestic consumer confidence, as trade tensions with the U.S. and Beijing struggle with a lingering housing recession and export headwinds.
The country’s exports unexpectedly contracted in October, with shipments to the United States down 25%, the seventh straight month of double-digit declines, according to customs figures released Thursday.
Export headwinds may now ease after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a trade ceasefire during their Oct. 30 meeting in South Korea, defusing a potentially incendiary situation that had raised fears of a full-blown trade war.
Last month, Chinese leaders vowed to boost domestic consumption as they laid out an economic roadmap for the next five years. China needs to “strongly expand consumption,” the conference document said, according to a translation by CNBC.
The leaders elaborated on the need to boost consumption, calling for it to be balanced with “effective investment” and “adhering to the strategic point of growing domestic demand.”
—CNBC’s Anniek Bao and Evelyn Cheng contributed to this report.
