The increase was higher than the 4.5% expected by economists polled by Reuters, and sharply up from the 3.8% seen in the previous month.
China’s National Bureau of Statistics said higher prices were also seen in the country’s coal sector, due to increased demand for coal for winter heating, temporary tight supply in major coal-producing areas, and expectations of rising international coal prices.
Consumer prices saw a 0.9% rise, marginally missing expectations of 1%, but up from 0.8% in the month before.
The increase in the consumer inflation rate was due to gasoline prices, which climbed 16.6% and contributed approximately 0.47 percentage points to the year-on-year CPI increase, according to Dong Lijuan, chief statistician of the Urban Division at the NBS.
This was partially offset by a wider fall in food prices, which declined 1.7% and pulled down the CPI by 0.29 percentage points, Dong added.
The core CPI rate, which excludes volatile food and energy prices, climbed 1%.
The higher inflation figures come as China’s economy grapples with its lowest growth rate in more than three years. GDP growth for the second quarter of the year missed expectations at 4.3%.
While economic data for August showed that retail sales expanded more slowly than expected, industrial output beat expectations.
On Sept 28, a State Council readout signaled that more policy support could be on the way for the Chinese economy, saying that “In response to emerging challenges in the economy’s operation, efforts should be made to intensify counter-cyclical adjustment of macro policies.”
Lynn Song, chief economist for Greater China at ING, wrote that “It marks a bit of a shift in tone,” adding that more policy support rollouts will be coming so as to reach both short- and long-term growth targets.
“These include the 4.5%-5.0% GDP growth target for 2026, and the longstanding goal to double GDP from 2020 to 2035.”
— This is breaking news, please check back for updates.
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