**China’s Consumer Inflation Remains Muted in October: Implications for the Forex Market**
*Based on reporting by FXStreet, with supplementary analysis from Reuters, Bloomberg, and official Chinese statistics*
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**Overview**
China’s consumer price index (CPI) for October 2024 posted a minimal year-on-year increase of 0.2 percent, falling below the market expectation of a 0.0 percent change. Simultaneously, producer prices continued their deflationary trend, suggesting persistent disinflationary pressures in the world’s second-largest economy. This development has significant implications not only for China’s internal economic outlook but also for global forex trading, especially for those analyzing the Chinese Yuan (CNY), the US Dollar (USD), and risk-correlated currencies across Asia-Pacific and beyond.
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**Key Inflation Data for October 2024**
– The National Bureau of Statistics (NBS) of China reported that the Consumer Price Index (CPI) rose by 0.2 percent year-on-year in October, surpassing the expected 0.0 percent.
– Month-on-month, the CPI contracted by 0.1 percent, following a similar decline of 0.2 percent in September.
– China’s Producer Price Index (PPI), an indicator of wholesale inflation and manufacturing sector health, fell by 2.6 percent year-on-year in October. Analysts polled by Reuters had expected a decline of around 2.7 percent, following a 2.5 percent fall in September.
– Core inflation, which strips out volatile food and energy prices, remained subdued at 0.6 percent, mirroring September’s figure and highlighting sluggish underlying demand.
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**Breakdown of Key Drivers Behind October’s Inflation Data**
*Consumer Price Index:*
– **Food Prices:** Unlike in many economies, food prices in China play a substantial role in determining the headline inflation figure.
– Food prices saw a significant decline of 4.0 percent from the year prior, accelerating from a 3.2 percent decline in September.
– Pork prices, a key staple in Chinese diets and economic considerations, dropped by 30.1 percent year-on-year, marking a steeper pace of disinflation compared to September’s 22 percent drop.
– Vegetable and fruit prices also declined, contributing to weak food inflation.
– **Non-Food Prices:** Non-food components of the CPI edged up by 0.7 percent from a year earlier.
– Transport-related costs fell by 3.5 percent, influenced by lower oil prices.
– Health care, education, and housing each posted modest gains generally in line with the broader economic environment.
*Producer Price Index:*
– The 2.6 percent drop in October PPI marks the 13th consecutive month of deflation for producer prices in China.
– International commodity price volatility, ongoing property sector distress, and sluggish global demand for Chinese exports have pressured manufacturers’ pricing power.
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