China's factory-gate prices rise 5% in September, the fastest since June 2022, as consumer inflation lags

Prices at China's factory gates rose at their fastest pace in more than four years in September as oil, coal and metals got more expensive, while consumer inflation edged up by less than expected, a sign that higher costs for industry have yet to spark stronger spending at home.

What the price data showed

China's producer price index rose 5% in September from a year earlier, the National Bureau of Statistics said on Wednesday, Oct. 14. That was up from 3.8% in August, above the 4.5% economists had forecast in a Reuters poll, and the fastest pace of factory-gate inflation since June 2022. On the month, producer prices climbed 1.2%, three times August's 0.4% gain.

The prices factories pay for their own inputs rose faster still, up 6.9% from a year earlier. Over the first nine months of the year, producer prices averaged 2.3% above the same period of 2025.

Consumer prices rose 0.9% from a year earlier, up from 0.8% in August but short of the 1% forecast. On the month they rose 0.2%, less than the 0.3% expected and down from 0.4% in August. Core inflation, which strips out food and energy, held at 1%.

Fuel, coal and metals did most of the work

The jump was concentrated in raw materials. Prices of goods used in production rose 6.5% from a year earlier, led by a 25.4% increase in mining and 9.4% in raw materials, the statistics bureau said. Prices of consumer goods leaving the factory gate slipped 0.1%.

By industry, coal mining and washing prices rose 35.3% from a year earlier, oil and gas extraction 24.5%, fuel processing 21.6% and chemicals 12.1%. Non-ferrous metal mining and smelting were each up 21.4%. Eight industries, including electrical machinery and electronics, together added about 5.42 percentage points to the annual rate, the bureau said. Prices fell in beverages, power and heat supply, pharmaceuticals, non-metallic mineral products such as cement, and car manufacturing, where they were down 2%.

Dong Lijuan, chief statistician in the bureau's urban division, tied the monthly rise to higher international crude oil and non-ferrous metal prices, which lifted oil extraction prices 14.5% and refined petroleum products 7.4% in September alone. Coal prices rose 9.5% on the month as buyers stocked up for winter heating, supply in the main mining regions tightened and international coal prices were expected to climb. Dong also pointed to demand from artificial intelligence and computing-power projects, which pushed up prices for electrical machinery and electronic equipment.

"Much of the upward pressure still came from commodity supply disruptions caused by the Middle East conflict," said Nguyen Hoang Nam, China economist at Capital Economics, who expects prices to fall back next year.

Households are still not feeling it

The consumer index tells a more muted story. Gasoline prices rose 16.6% from a year earlier and contributed about 0.47 percentage point to headline inflation on their own, according to the bureau. Food prices fell 1.7%, subtracting about 0.29 point, as pork dropped 10% and fresh vegetables 8.1%.

Higher costs are reaching shoppers in one corner of the basket: electronics. Prices of data storage devices were up 46.7% from a year earlier, tablets 23.6%, computers 21.8% and mobile phones 14.9%. Services prices rose 0.8%, and airfares and hotel rates fell on the month after the summer holidays ended.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note after the data, cited by CNBC, that the weaker-than-expected consumer reading showed domestic demand remains "lackluster." Hao Zhou, chief economist at Guotai Junan International, saw the stronger producer prices as a sign that the deflation of 2024 and 2025 "is continuing to fade," even as households lag the industrial sector. The key question, Zhou said, is whether stronger industrial momentum can feed through to jobs, incomes and consumer confidence.

A turn in prices, not yet in demand

For most of the past two years China's problem was falling prices. September's figures show that has turned at the factory gate, but largely because of what the country imports and digs up, not because consumers are spending more. That gap matters for profits: when input costs rise faster than the prices companies charge, margins get squeezed, particularly for manufacturers selling into a soft home market.

It also complicates the policy picture. Growth slowed to 4.3% in the second quarter, below expectations and the weakest pace in more than three years. A State Council readout on Sept. 28 called for stronger counter-cyclical policy, which Lynn Song, chief economist for Greater China at ING, described as a shift in tone that points to more support to hit this year's 4.5% to 5% growth target. Beijing has also approved an additional 550 billion yuan ($82.15 billion) of unused local government bond quota for infrastructure and other spending.

Chinese stocks were little changed after the release, with the blue-chip index down 0.1% and the Shanghai Composite up 0.1%.