China inflation loses momentum amid broader rebound

September had seen China’s factory gate prices dropping faster than what was expected. Meanwhile, consumer inflation grew at its most gradual pace in 19 months, highlighting the challenges that the country faces amid its emergence from the coronavirus drag.

After recording a 2.0% drop in August, the producer price index (PPI) fell 2.1% in September. The figure released by the National Bureau of Statistics placed lower than the 1.8% drop expected by economists in a Reuters survey, marking its eighth month of decline. Meanwhile consumer prices expanded behind expectations.

In the second quarter, China’s gross domestic product had recorded a 3.2% increase from a year ago. This could be attributed to a sustained recovery backed by large volumes of stimulus from the government and easing coronavirus infections.