China’s deflation eased in September, leaving the country on track for the longest streak of economy-wide price declines since market reforms in the late 1970s.
Prices at the factory gate fell 2.3% from a year earlier, the 36th straight month of declines that was in line with forecasts. Consumer prices dropped 0.3%, the National Bureau of Statistics said Wednesday, below the median estimate of minus 0.2% in a Bloomberg survey of economists.
The core consumer price index, which excludes volatile items such as food and energy, rose to a 19-month high of 1%.
“An improvement in demand and supply has stabilised prices in some industries, such as coal mining and solar equipment,” Dong Lijuan, chief statistician at the NBS, said in a statement.
The world’s second-biggest economy has been mired in deflation since the end of the pandemic, with the housing market crash compounding weak consumer demand. Overcapacity in some industries has led to a glut of production, forcing firms to cut prices to survive.
See also: ‘Buy the dip’ call gets louder as China selloff seen limited
Deflationary pressures have persisted despite government attempts to slow or stop the crushing price wars and competition among manufacturers. China’s GDP deflator — the broadest measure of prices — has been in decline for over two years in the longest stretch since the quarterly data began in 1992.
Nine straight quarters of economy-wide price declines reflect a mismatch between supply and demand, weighing on the balance sheets of companies and pushing down the earnings of both households and the government. Citigroup Inc. estimates the GDP deflator stayed around minus 1.3% in the third quarter.
China’s government reduced its official target for consumer inflation to around 2% for 2025, the lowest level in over two decades. Even so, price growth has been near zero or negative for much of this year.
See also: China brands are now global competition
China is set to announce third-quarter data for economic activity on Oct 20, with most analysts predicting a slowdown from the first half of the year.
A strong showing in the first two quarters likely means China will reach the official growth target of around 5%, with fresh stimulus probably not on the agenda for a meeting of the ruling Communist Party later this month.
