Due to severe power shortages and record-setting commodity prices hitting the world’s second largest economy, China’s factory prices in October rose at the fastest rate in 26 years.
According to data released by the National Bureau of Statistics on Wednesday, China’s official producer price index has risen by 13.5% compared to October 2020, which is the largest monthly increase since 1995.
This increase exceeded the 12.4% forecast by analysts surveyed by Reuters and exceeded the increase in September. 10.7% This is also the highest value since 1995.
The ex-factory price refers to the cost of materials purchased by the wholesaler from the manufacturer, regardless of transportation and distribution costs.
Producer prices have accelerated Declining manufacturing activity The slowdown in growth poses a challenge to President Xi Jinping’s comprehensive reform of China’s business landscape, which has raised concerns about stagflation and complicates China’s economic outlook.
Commodity price rise It has also exacerbated the country’s energy dilemma.China is fighting Soaring coal prices After flooding in key mining areas, the government’s clean energy targets reduced production, and extensive power rationing caused a second monthly contraction in manufacturing activity in October.
Dong Lijuan, a senior statistician at the National Bureau of Statistics of China, said that the increase in PPI in October was the result of “the tight domestic supply of key energy and raw materials”.
Dong pointed out that oil prices rose last month More than $85 Prices per barrel in the United States and 2,301 yuan (US$360) per ton of coal in China drove this growth.
Dong added that the prices of production materials in October rose by 17.9% compared to the same period last year, while prices in the coal mining and washing industries rose by 103.7%.
However, Citi analysts predict that PPI inflation is close to its peak and will not remain high.
And recent measures taken to control rising costs, including coal miners’ Commitment to lower prices Analysts said that the receding of the energy crisis will help curb inflationary pressures.
“Stagflation concerns should be eased,” Citi analysts wrote in a report.
Nonetheless, some expect Beijing’s central bank governor may be forced to provide more support in response Economic momentum slows down.
“we estimate [People’s Bank of China] There will be more easing tendencies for the rest of this year to cushion the economic slowdown,” said Liu Jing, China Economist at HSBC.
Consumer price inflation in October also rose faster than economists had predicted, setting a new high in 13 months.
China’s CPI rose 1.5% year-on-year, and rose 0.7% from September. The cost of fresh vegetables rose by 16.6%, further exacerbating concerns that soaring production costs are affecting necessities.
But Xing Zhaopeng, China strategist at ANZ Bank, said that household disposable income has slowed and the flow restrictions imposed to curb new liquidity. The Covid-19 outbreak Will limit consumption growth.