China Producer Inflation Hits Four-Year High

China's producer prices surged at their fastest rate since June 2022 in October. The producer price index rose 5.7%, surpassing the 5.3% increase predicted by economists surveyed by Reuters. This marked the third consecutive month of acceleration in industrial inflation.

Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, told CNBC's 'Squawk Box Asia' that strong external demand drove the jump. He noted that prices in mining and raw materials industries spiked sharply. This growth occurred even as consumer price growth eased.

Consumer prices increased 0.7% in October. This figure fell below the 0.8% rise expected by analysts and dropped from the 0.9% reading in September. Core inflation, which excludes food and energy, also slowed to 0.8% from 1% in the prior month.

Dong Lijuan, chief statistician of the urban division at China's National Bureau of Statistics, identified gasoline as the primary driver of the consumer price increase. However, a larger than expected drop in food prices offset fuel costs. This balance kept overall inflation below market expectations.

The data follows recent signs of economic expansion in China. Third-quarter growth exceeded forecasts, and September retail sales outpaced predictions. These indicators suggested stronger activity in specific sectors despite subdued consumer pricing.

Market reaction was immediate following the release. Mainland China's CSI 300 stock index rose 0.56% on the news. The index reflected a split signal where producer growth beat estimates while consumer inflation lost momentum.

Zhang Zhiwei linked weak domestic demand to the property sector. He stated that the industry had not shown clear signs of stabilization. This weakness continued to weigh on household confidence and local government revenue. Zhang described overall economic momentum as weak, noting that a clear recovery had not yet emerged.