China slips back into deflationary territory as demand wanes

The news: Deflationary woes in China have been reignited as consumer prices swung back into decline in October and producer prices fell for the 13th straight month.

The numbers: The consumer price index fell 0.2% last month, overshooting expectations of a 0.1% contraction after holding steady in September, according to data from China's National Bureau of Statistics. Core inflation, which ignores fuel and food prices, eased to 0.6% from 0.8% the month before. Factory-gate deflation increased to 2.6% from 2.5% the month before, marking the 13th straight month of negative price growth for producers.

The context: The figures make life difficult for China's policymakers, who have an inflation target of around 3%. Persistent deflation and weak domestic demand will put pressure on China's post-COVID recovery, further complicated by a liquidity crisis in its property sector.