China's Inflation Reports Confirm Entrenched Deflationary Forces

Li Chen
15 Oct, 2025
Hong Kong

Stocks in China and Hong Kong edged higher, and investors awaited the start of earnings season and debated the prospects of additional stimulus.

The Hang Seng Index gained 1.2%, and the mainland-focused CSI 300 index inched up 0.03% after the release of two inflation reports. 

Consumer price inflation slowed to an annual 0.3% in September, and producer price inflation, the National Bureau of Statistics reported Wednesday. 

Prices declined at a slower pace than the annual fall of 0.4% in the previous month, but the deflationary trend is likely to persist for the foreseeable future. 

Core inflation, which excludes volatile food and energy prices, accelerated to 1% from 0.9% in August, the highest in nine months. 

Consumer goods prices fell 0.8%, while services prices advanced 0.8% in September.  

Food price decline deepened to 4.4% from 4.3%, the sharpest fall since January 2024 amid a broad-based fall across all categories. 

China's producer price inflation slowed but extended the deflationary trend to the 36th consecutive month amid overcapacity and weak consumer demand. 

Producer price inflation eased to 2.3% in September from 2.9% in the previous month, as policymakers worked behind the scenes to curb excess capacity in several key manufacturing sectors. 

On a monthly basis, producer prices remained flat from August, driven by a rise in demand ahead of the Golden Week holiday season. 

 

China Indexes and Stocks

The Hang Seng index increased 1.2% to 25,754.71, and the mainland-focused CSI 300 index edged up 0.03% to 4,537.73. 

Alibaba Group Holding increased 2.9% to HK $160.10, Tencent Holdings edged up 0.6% to HK $625.50, and Meituan gained 0.9% to HK $99.20. 

HSBC Holdings plc added 1.8% to HK $103.70, China Life Insurance jumped 3.2% to HK $22.64, and China Merchants Bank edged up 0.8% to HK $48.56. 

Xuanzhu Biopharmaceutical soared 135% to HK $26.50 after the company priced its initial public offering at HK $11.60 per share and sold 67.3 million shares. 

The biopharma company focused on digestive diseases, oncology, and non-alcoholic steatohepatitis raised net proceeds of HK$701 million.