China factory prices up after recovery from pandemic

BEIJING: Factory prices in China rose again in February, official data showed Wednesday, as the country´s vast industrial sector recovered from a coronavirus-induced slump.

The producer price index (PPI), which measures the cost of goods at the factory gate, had risen for the first time in a year in January, and analysts expect an increase in global commodity prices to lift inflation further in the coming months.

PPI rose 1.7 percent last month, data from the National Bureau of Statistics showed, exceeding analysts´ expectations.

NBS senior statistician Dong Lijuan said prices for petroleum-related industries continued to rise due to the sustained “upward trend of international crude oil prices”.

Dong added there was also a rise in domestic demand and continued growth in international metal commodity prices, pushing up prices in metals industries.

Consumer prices, on the other hand, fell 0.2 percent in February, slightly less than analysts expected, dragged partly by food prices.

Pork prices were 14.9 percent lower than in the same period last year, when the cost of the staple meat soared after China´s herds were ravaged by African swine fever.

Nomura chief China economist Lu Ting said that mass vaccine rollouts across the world and fiscal stimulus programmes in many developed economies with low interest rates meant commodity prices could rise further in the next few months.

“China is heavily dependent upon energy and commodity imports, so a surge in the prices of these products will have a material impact on China´s inflation, especially PPI inflation,” Lu warned in a market note.