China's factories are feeling the energy shock. Chinese consumers aren't spending.

There’s a strange split in China’s latest inflation numbers. Factory-gate prices jumped 5.7% in October, the fastest increase in nearly four and a half years. Consumer prices rose just 0.7%, slower than September. Oil, coal, gas and chemical producers are charging more, partly because of the Middle East conflict. But Chinese households are still holding back on spending. That leaves manufacturers dealing with higher costs without much room to raise prices on customers. Beijing has been trying to get domestic demand moving for years. These figures show the problem hasn’t gone away. The energy shock is showing up in factory costs before it shows up in household spending.

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