- PPI hits record on production brakes, world commodity rally
- Seven highest PPI since data began to be compiled in 1996
- Seven CPI 0.7% y / y against + 0.9% in the Hfrance.fr poll, +0 , 8% in August
BEIJING, October 14 (Hfrance.fr) - Inflation at the exit of factories in China in September hit a record with soaring commodity prices, but weak demand capped consumer inflation, forcing policymakers to walk a tightrope between supporting the economy and supporting the economy. 'increase in producer prices.
The producer price index (PPI) increased by 10.7% year on year earlier in September, the National Bureau of Statistics (NBS) said Thursday, the largest increase since the bureau began compiling data in 1996. Economists in an Hfrance.fr survey expected a increased 10.5%, following a 9.5% increase in August.
Producer prices rose due to production restrictions caused by a power outage in a house and a rally in world commodity prices over several months. But Chinese companies have been reluctant to pass the higher costs on to local customers due to already low orders.
Thursday's data showed that the Consumer inflation slowed last month, weighted by weak demand for goods ranging from clothing to household appliances, as well as a drop in volatile food prices.
Tang Jianwei, chief macroeconomics analyst at BOCOM, said China 's mixed picture of inflation has posed a dilemma for the country's monetary authorities.
"On the one hand, relatively weak domestic demand requires some degree of easing to support a recoverye demand and, on the other hand, a record PPI limits the room for flexibility, "said Tang Jianwei, chief macroeconomic analyst at BOCOM.
Underlying producer prices, global commodity prices have jumped in recent months due to increased demand for coal and ls as economies around the world have reopened after have been closed due to the COVID-19 pandemic. Labor shortages and transport bottlenecks have also pushed up prices globally. learn more
Adding to price pressures in China, widespread power cuts in September disrupted production in the cement, steel industries and aluminum, and have even discontinued production in namemany factories, including many suppliers of major global brands such as Apple (AAPL.O) . China's electricity crisis is caused by a shortage of coal as part of the effort to meet decarbonization targets and record fuel prices. learn more
Prices rose in 36 of 40 industrial sectors last month, up from 32 sectors in August, according to the data. Mining and coal prices jumped 74.9%, up sharply from the 57.1% increase in August.
But the consumer price index rose 0.7% year-on-year. in September, slowing from an increase of 0.8% in August and below expectations of a0.9% increase in the Hfrance.fr survey.
"Supply bottlenecks continue to exist and the demand was low, so producers cannot pass on the costs. This is a painful process that the Chinese economy has to go through, "said Zhou Hao, Senior EM Economist at Commerzbank.
China's economic growth is expected to slow to 5.2% yoy in the third quarter, from 7.9% in April-June, according to a recent poll Hfrance.fr.
The increasing pressures on prices then arise same as Beijing has taken a series of measures to curb record coal prices and ease the country's energy crisis, including urging coal miners to increase production and manage electricity demand in industrial factories. learn more
The government said last week that it would allow coal-fired electricity prices to fluctuate by up to 20% from levels in basis, a relaxation of the previous limits. learn more
ANZ expects this decision to increase the overall PPI by 2 percentage points in the short term, while the impact on the 'CPI will only be 0.5 percentage point.
Tang said the chances of lower interest rates or 'a reduction in bank reserve requirements this year were low, adding that the authorities would likely maintain reasonably abundant interbank liquidity throughstructural support.
The People's Bank of China has kept its benchmark rate for loans to businesses and households unchanged for 17 months, while it last lowered reserve requirements in mid-July. learn more
Core inflation, which excludes food and energy price volatility, reached 1.2% in September, unchanged by report to August.
However, a sign that consumer inflation is not indefinitely immune from wider pressures on price, Foshan Haitian, China's largest soy sauce maker, said this week that it plans to increase prices by up to 7% from Oct. 25 due to rising material costs raw materials, transport and energygie. Reporting by Liangping Gao, Stella Qiu and Ryan Woo; Edited by Ana Nicolaci da Costa
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