China remains fragile, consumer price index hits 11-year low

This sharp slowdown is largely due to the prices of food products, particularly pork, the most widely consumed meat in China, which fell 2.8% year on year in October. This is the first drop in pork prices for 19 months in a country hit by an African swine fever epidemic that has decimated the herd. This crisis has caused a doubling of pork prices in recent years.

Price increases fell to their lowest level in China in 11 years last month, with the consumer price index rising just 0.5%, the National Bureau of Statistics (SNB) said on Tuesday.

After several encouraging indicators for the recovery of the Chinese economy, paralyzed at the start of the year by the coronavirus epidemic, the weakening of prices in October is a reminder that the economy remains fragile in the world's second-largest economy.

Analysts polled by financial agency Bloomberg were betting on average a 0.8% rise in consumer prices, after the 1.7% increase recorded in September.

This sharp slowdown is largely due to the prices of food products, particularly pork, the most widely consumed meat in China, which fell 2.8% year on year in October.

This is the first drop in pork prices for 19 months in a country hit by an African swine fever epidemic that has decimated the herd. This crisis has caused a doubling of pork prices in recent years.

The general slowdown in prices should only be temporary, once the fall in pork prices is absorbed, analysts predict.

     "Inflation will rebound after the first quarter of 2021 thanks to the increase in post-pandemic demand," forecasts Zhaopeng Xing, of ANZ Research.

As for producer prices, the index fell last month by 2.1% over one year, as in September. Analysts expected a smaller decline of around 1.9%.

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