China’s producer inflation at 26-year high adds to global risks
BNN Bloomberg
China’s factory-gate prices grew at the fastest pace in almost 26 years in September, potentially adding to global inflation pressure if local businesses start passing on higher costs to consumers.
China’s factory-gate prices grew at the fastest pace in almost 26 years in September, potentially adding to global inflation pressure if local businesses start passing on higher costs to consumers.
The producer price index climbed 10.7 per cent from a year earlier, beating forecasts and reaching the highest since November 1995, as coal prices and other commodity costs soared, data from the National Bureau of Statistics showed Thursday.
There’s little evidence yet that consumer goods factories are passing on higher input costs to customers, with consumer prices growing at a slower pace of 0.7 per cent last month. However, that could change as producers see their profits squeezed and China braces for higher electricity prices amid an energy crunch.
“The widened gap between PPI and CPI means greater pressure for upstream sectors to pass on rising costs to the downstream,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong.
People’s Bank of China Governor Yi Gang told a Group of 20 forum that China’s inflation is “moderate,” according to a statement on the central bank’s website Thursday. He reiterated that monetary policy would be flexible, targeted, reasonable and appropriate.
