China’s September CPI Rises 0.9%, PPI Up 5.0% to a Four-Year High

China’s consumer price index (CPI) rose 0.9% year on year in September, the National Bureau of Statistics reported on Oct. 14. The producer price index (PPI) rose 5.0%, its largest gain since June 2022 (6.1%). With factory-gate prices climbing faster than consumer prices, the question for companies is how much of their higher costs they can pass on.

By FOCUS BUSINESS editorial staff

Consumer prices: energy up, food down

September CPI rose 0.9% from a year earlier and 0.2% from August. That was slightly below the market forecast of 1.0% but above August’s 0.8%. Core CPI, which excludes food and energy, rose 1.0%.

Energy drove the increase. Energy price growth widened from 4.1% in August to 7.3% in September, with gasoline up 16.6%. Industrial consumer goods excluding energy rose 1.6% and services rose 0.8%, while food prices fell 1.7%. Service prices slipped 0.2% from the previous month.

Producer prices: seventh straight rise, biggest in over four years

September PPI rose 5.0% year on year, extending positive readings to seven months. The pace was 1.2 percentage points faster than in August, and prices rose 1.2% month on month. The market forecast was 4.4%.

Prices of production materials rose 6.5%, lifting the index, while consumer goods prices fell 0.1%. Coal mining and washing (35.3%), oil and gas extraction (24.5%) and non-ferrous metal mining and smelting (21.4% each) rose the most; automobile manufacturing (-2.0%) and pharmaceuticals (-3.3%) were among those that fell. Industrial purchase prices rose 6.9%, and PPI for January–September is up 2.3%.

Business Checkpoints

Korean companies that source materials and parts in China, or manufacture there, should first check the effect of higher costs. With factory-gate prices rising much faster than consumer prices (0.9%), it may be hard to pass costs through to final selling prices. This is a good time to review price-adjustment clauses in supply contracts and the timing of inventory purchases.

For consumer goods, distribution and services, cost control and margin checks come before price increases. One month of data does not settle the trend, so watch the October figures as well.

※ This article is based on data released by the National Bureau of Statistics of China and Korean media reports.