On October 18, during a press conference held by the State Council Information Office, Deputy Director of the National Bureau of Statistics Sheng Laiyun addressed the economic performance in the first three quarters of 2024. He reported that the Consumer Price Index (CPI) in September rose by 0.4% year-on-year while remaining stable month-on-month. This reflected a decrease of 0.2 percentage points from the previous month’s growth rate.

Sheng explained that there are three main reasons for the decline in price growth. First, the increase in food prices has tapered off. In August, extreme weather conditions—including high temperatures, typhoons, and heavy rain—impacted the supply of vegetables and other foodstuffs, resulting in a 3.4% month-on-month increase in food prices. In contrast, September saw a decrease of 2.6 percentage points in this rate. Second, as the summer holidays came to an end, service prices—particularly airfare and travel costs—also saw reductions, which contributed to a lesser impact of service prices on the CPI. Finally, the decline in oil prices played a role; domestic fuel prices dropped due to a decrease in international crude oil prices. As a result, the CPI growth in September showed a decline compared to August.

Additionally, Sheng noted the complex dynamics of pricing in China, reflecting the vast geographic range, varied industrial levels, and significant structural changes within the market. Overall, he outlined three key trends observed in pricing during the first three quarters:

The first trend is one of low-level operation. The CPI and the Producer Price Index (PPI) have seen modest increases, with the CPI remaining between 0.3% and 0.6% year-on-year since the first quarter of this year, while the PPI continues to decline. This indicates a persistent oversupply in the domestic market.

The second trend is a moderate recovery. With ongoing economic recovery and the implementation of stable economic policies, overall societal demand has risen, leading to gentle increases in prices. The CPI was flat in the first quarter, increased by 0.3% in the second, and rose by 0.5% in the third quarter, indicating steady growth. The rate of decline in PPI has narrowed as well, dropping 2.7% in the first quarter, 1.6% in the second, and 1.8% in the third, suggesting an overall positive economic trend.

The third trend is the disaggregated nature of price movements. While the CPI continues to show a year-on-year increase, the PPI is still declining. This indicates a complex pricing situation in China with distinct phases and structural characteristics. For instance, the PPI’s decline is not solely due to weak demand; externally imposed pressures, such as falling global oil and mineral prices, also contribute, which in turn affects related domestic industries. Additionally, the decline in prices for steel, cement, and building materials relates to adjustments in the real estate sector, where demand may not return to previous levels due to shifts in market needs and capacity reduction in traditional industries.

In summary, the trends observed point toward economic recovery. Looking ahead, it is expected that pricing dynamics will continue the low-level operation, moderate recovery, and narrowing PPI declines evident in the first three quarters. Economic growth is anticipated to persist, coupled with increasing overall demand, especially following the implementation of an array of stimulating policies, which should further elevate prices in related sectors. Seasonal factors will also play a role; as winter approaches, food supply might be affected while demand increases, particularly for products like pork ahead of the New Year and Spring Festival. Thus, the CPI and PPI are likely to see moderate increases and narrowing declines in the fourth quarter.