Focus on China Economy

Factory gate prices in China jump to more than 12-year high on rising commodity costs

China’s factory gate prices increased at their fastest annual pace in over 12 years in May due to surging global commodity prices and a low base of comparison, while consumer prices increased for the third straight month but at a slower-than-expected rate, Reuters reports.

The producer price index (PPI) increased by 9 percent from a year earlier, the National Bureau of Statistics (NBS) said in a statement, driven by significant price increases in crude oil, iron ore and non-ferrous metals.

Analysts in a Reuters poll had expected the PPI to rise by 8.5 percent after a 6.8 percent increase in April. On a monthly basis, the PPI gained by 1.6 percent, up from a 0.9 uptick in April.

Higher commodity prices and low bases last year could further drive up China’s producer price inflation in the second and third quarter, China’s central bank has said. Prices for commodities including coal, steel, iron ore and copper, which affect the PPI, have surged this year, fuelled by post-lockdown recoveries in demand and ample global liquidity.

In April, the producer price index, fell by 3.1 percent year-on-year, the National Bureau of Statistics, reported in May. The reading deepened from the 1.5-percent drop in March, with price declines widening in major industries.

China’s May consumer prices rise by 1.3pc

China’s consumer price index (CPI), a main gauge of inflation, gained by 1.3 percent year on year in May, data from the National Bureau of Statistics showed Wednesday, state news agency Xinhua reports.

In April, inflation grew by 0.9 percent year-on-year, compared with a 0.4 percent rise in March, the National Bureau of Statistics said early May.

China plays down foreign trade prospects

The external environment for China’s foreign trade remains complex and the country cannot be blindly optimistic about trade prospects in 2021, the commerce ministry said on Wednesday, Reuters reports.

China will step up firms’ ability to cope with foreign exchange risk, the ministry also said in a report on its website.

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