Bank of America said China’s September inflation data showed early signs of easing deflation, though overall price pressures remain subdued amid weak domestic demand.
Consumer prices (CPI) fell 0.3% year-on-year in September, while producer prices (PPI) declined 2.3%, both matching BofA’s forecasts and showing a narrower contraction than in August. The bank attributed the improvement partly to base effects and a sharp rise in gold prices, which helped offset further food price declines.
BofA said targeted policy measures and selective industry support have moderated deflationary pressures, but China’s economy continues to face structural challenges as supply growth outpaces demand. The bank expects PPI deflation to ease gradually in the coming months thanks to the favourable base and efforts to rein in overcapacity. However, with consumption momentum still weak, CPI inflation is likely to stay negative through the fourth quarter.
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BofA’s outlook suggests China’s deflationary trend is moderating but not reversing, reinforcing expectations for continued policy support. The call points to limited upside for domestic demand and subdued pricing power for manufacturers heading into 2026.
This article was written by Eamonn Sheridan at investinglive.com.