Inflation in China showed faint signs of life in October, with consumer prices rising slightly and the decline in producer prices being less severe than anticipated. At first glance, this appears to be an improvement. However, in reality, it is more of a pause in an extended period of deflation.

According to the National Bureau of Statistics, the consumer price index increased by 0.2% year-on-year, surpassing expectations for zero growth and significantly rebounding from the previous month’s 0.3% decline. On a monthly basis, the CPI also rose by 0.2%, marking its first positive result since June.

This uptick was bolstered by the Golden Week holiday and a revival in consumer spending, characterized by increased travel and purchases as citizens sought to embrace economic optimism. Demand surged further due to major retail events, such as Singles’ Day, which traditionally boosts sales.

Nevertheless, the broader context remains unchanged. China continues to teeter on the brink of deflation. Producer prices dropped by 2.1% year-on-year in October, which was slightly better than expected but still marked the 37th consecutive month of decline. Even temporary production restrictions have failed to shift the overall trend, as the industrial sector operates with minimal confidence.

Economists point out that domestic demand remains weak, retail prices are stagnant, and ongoing trade tensions with the United States are adding to the pressure on the economy.

Beijing has promised new stimulus measures and cautiously hinted at the possibility of expanding fiscal support. In addition, improved relations with Washington are expected to provide the economy with much-needed relief.

However, the data speaks for itself. While inflation may have returned, it is more of a statistical effect than a signal of genuine recovery.