China’s October 2025 inflation rate MoM of 0.10% marks a slight rebound after a stagnant September. This figure remains below the 12-month average MoM inflation of approximately 0.15%, indicating subdued but positive price momentum. The inflation environment reflects a balance between recovering domestic demand and persistent global uncertainties.

Drivers this month

• Energy prices contributed 0.04 percentage points, reflecting moderate global oil price gains.
• Food inflation added 0.03 percentage points, driven by seasonal vegetable price increases.
• Core goods inflation remained muted, contributing 0.02 percentage points.
• Services inflation was stable, adding 0.01 percentage points.

Policy pulse

The People’s Bank of China (PBOC) maintains a cautious stance, keeping benchmark lending rates steady. The 0.10% inflation rise remains below the implicit target range of 2-3% annualized, suggesting limited immediate pressure for monetary tightening.

Market lens

Following the release, the Chinese yuan (CNY) depreciated slightly against the USD, reflecting market disappointment versus expectations. Short-term bond yields edged down by 3 basis points, signaling continued accommodative financial conditions.

Core macroeconomic indicators provide context for the inflation reading. China’s GDP growth for Q3 2025 slowed to 4.80% YoY, down from 5.10% in Q2, reflecting weaker export demand and cautious domestic consumption. Industrial production rose 3.20% YoY, a deceleration from 4.00% in the prior quarter. Retail sales growth moderated to 5.50% YoY, signaling soft consumer spending.

Monetary policy & financial conditions

The PBOC’s benchmark one-year loan prime rate remains at 3.65%, unchanged since mid-2025. Liquidity injections via open market operations continue to support credit growth, which expanded 10.20% YoY in September. Inflation below target allows the central bank to maintain accommodative policy without immediate hikes.

Fiscal policy & government budget

China’s fiscal deficit widened slightly to 3.20% of GDP in Q3, reflecting increased infrastructure spending and social welfare outlays. The government’s stimulus focus on green energy and technology sectors aims to support medium-term growth without overheating the economy.

Drivers this month

• Energy prices: 0.04 pp (up from 0.02 pp in September)
• Food prices: 0.03 pp (seasonal vegetable price rise)
• Core goods: 0.02 pp (stable)
• Services: 0.01 pp (steady)

Market lens

Immediate reaction: The CNY/USD exchange rate weakened by 0.15% within the first hour post-release, while 2-year government bond yields declined by 3 basis points, reflecting market expectations of continued policy support amid subdued inflation.

Looking ahead, inflation in China faces mixed pressures. On the upside, recovering domestic demand and rising commodity prices could push MoM inflation above 0.15% in coming months. On the downside, global geopolitical tensions and supply chain disruptions may cap inflationary gains.

Scenario analysis

• Bullish (30% probability): Inflation accelerates to 0.20-0.25% MoM as consumer spending rebounds and energy prices rise further.
• Base (50% probability): Inflation remains stable around 0.10-0.15% MoM, reflecting balanced supply-demand dynamics and steady policy.
• Bearish (20% probability): Inflation stalls or dips below 0.05% MoM due to renewed external shocks or domestic demand weakness.

Policy implications

The PBOC is likely to maintain its accommodative stance, given inflation remains below target and growth is moderate. Fiscal policy may continue targeted stimulus, especially in green sectors, to support long-term structural transformation.

China’s October 2025 inflation rate MoM of 0.10% signals a tentative recovery in price pressures after a flat September. The subdued but positive inflation environment supports ongoing accommodative monetary policy and targeted fiscal stimulus. External risks and structural shifts will continue to shape inflation dynamics in the medium term.

Investors and policymakers should monitor commodity prices, consumer demand trends, and geopolitical developments closely. The balance of risks suggests a cautious but constructive outlook for China’s inflation trajectory through early 2026.

Key Markets Likely to React to Inflation Rate MoM

China’s inflation data typically influences currency, bond, equity, and commodity markets. The following tradable symbols historically track inflation trends or are sensitive to related macro shifts:

• CNHCNH – The offshore Chinese yuan pair reacts to inflation-driven monetary policy shifts.
• 000001.SZ – Shenzhen Composite Index, sensitive to domestic economic conditions and inflation.
• 601398.SS – Industrial and infrastructure sector exposure, linked to fiscal stimulus and inflation.
• USDCNH – Onshore yuan exchange rate, closely tied to inflation and monetary policy.
• BTCUSDT – Bitcoin as an inflation hedge and risk sentiment barometer.

Inflation Rate MoM vs. CNHCNH Since 2020

Since 2020, monthly inflation rate movements in China have shown a moderate positive correlation with the CNHCNH offshore yuan exchange rate. Periods of rising inflation often coincide with yuan appreciation, reflecting tighter monetary policy expectations. For example, inflation spikes in early 2023 aligned with a 2.50% yuan gain over three months. This relationship underscores the importance of inflation data for currency traders and policymakers alike.

FAQs

What is the latest China Inflation Rate MoM?

The October 2025 inflation rate MoM for China was 0.10%, up from 0.00% in September but below the 0.20% estimate.

How does this inflation reading impact monetary policy?

Sub-0.15% monthly inflation supports the PBOC’s current accommodative stance, with no immediate rate hikes expected.

What are the key risks to China’s inflation outlook?

Upside risks include stronger domestic demand and commodity price rises; downside risks stem from geopolitical tensions and supply chain disruptions.

Takeaway: China’s October inflation MoM of 0.10% signals a cautious recovery in price pressures, supporting steady monetary policy amid balanced macro risks.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.