China's factory prices gallop to 25-year high

Finance | Reuters and Bloomberg 15 Oct 2021

China's producer price index rose 10.7 percent in September from 12 months previously - the fastest rate since the National Bureau of Statistics started compiling the data in 1996.

But the consumer price index rose only 0.7 percent.

The jump in factory gate prices was driven by soaring raw material costs, piling pressure on businesses already grappling with energy curbs and supply bottlenecks, according to the bureau.

"The widened gap between PPI and CPI means greater pressure for upstream sectors to pass on rising costs to the downstream," said Bruce Pang Ming, head of macro and strategy research at China Renaissance Securities Hong Kong.

This came as Premier Li Keqiang said yesterday that the leadership is confident of achieving this year's national economic growth target. But he acknowledged that growth in the third quarter of the year had slowed.

But the PPI figures was not unexpected after a 9.5-percent increase in August.

Meanwhile, the consumer price index's year-on-year rise slowed from 0.8 percent increase in August.

Other just-released data showed China's outbound shipments in September jumped 28.1 percent year-on-year after a 25.6-percent gain in August, which was considerably higher than market estimates for a 21-percent rise.

China's inflation is "moderate," People's Bank of China governor Yi Gang told a G20 forum on Wednesday. He also insisted that monetary policy would be flexible, targeted, reasonable and appropriate.



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