(Yicai) Nov. 10 -- China’s producer price index expanded at a faster pace last month because of increased prices in some industries, while the consumer price index growth slowed due to weak demand recovery, widening the gap between the two indicators.

The PPI rose 5.7 percent in October from a year earlier, compared with a 5 percent year-on-year jump the month before, while the CPI inched up 0.7 percent in the period, down from a 0.9 percent growth in September, according to data released by the National Bureau of Statistics yesterday. On a monthly basis, the PPI widened 0.7 percent, down from 1.2 percent in September, and the CPI remained unchanged.

October’s price data continued the overall pattern seen earlier, with a modest performance on the consumer side and structural improvements on the industrial side, Pang Ming, member of the China Chief Economist Forum, told Yicai.

In the consumer sector, prices were still weighed down by falling food prices, while service consumption and core inflation remained stable, he noted, adding that on the production side, momentum accelerated, and prices improved in advanced manufacturing and some industries related to new quality productive forces.

Last month’s data shows that the rise in production prices is mainly concentrated upstream, while consumer prices are still held back by weak food prices, according to China Galaxy Securities.

As the support for upstream prices partly comes from uncertainty from geopolitical tensions, and the weakness in the CPI is mainly due to falling food prices and a slow domestic demand recovery, if the improvement in end demand remains limited and external support from energy prices weakens, future data is more likely to show a pullback in PPI and a stabilization or a slow rise in CPI, Galaxy Securities analyzed.

PPI data shows that supply-demand conditions in some industries improved further, Pang said. Prices in coal mining, coal processing, and photovoltaic equipment and components continued to rise, while prices in cement, lithium batteries, and integrated circuits also improved marginally.

Capacity management, improved industry competition, and the exit of some outdated capacity continued to narrow price declines in the PV, battery, and automotive sectors, Pang noted. Demand related to technological innovation and consumption upgrading also pushed up prices in nonferrous metal materials, special electronic materials, and some consumer goods manufacturing industries.

Driven by the global artificial intelligence investment boom, prices of electronic components and products, such as chips, computers, and mobile phones, have risen rapidly this year, becoming an important factor pushing up the PPI, said Feng Lin, executive director of research and development at Golden Credit Rating International.

Among the CPI components, gasoline prices surged over 22 percent in October from a year earlier, contributing 0.6 percentage point to the CPI increase, NBS data also showed. However, food prices plunged 2.9 percent in the period, dragging the CPI down by about 0.5 percentage point.

Vegetable prices fell sharply last month, which drove the year-on-year decline in food prices to widen significantly and fully offset the impact of higher gasoline prices, Feng noted. Meanwhile, international gold prices plunged, and prices of durable consumer goods, such as automobiles and home appliances, continued to fall, further pressuring the CPI.

However, driven by the global AI investment boom and the resulting sharp rise in chip prices, prices of electronic products, such as computers and mobile phones, kept increasing in October, providing some upward support to the overall price level, Feng added.

Editor: Futura Costaglione