Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China's factory-gate prices surge, but CPI growth still modest

Economic IndicatorsMay 11, 2021 01:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory, as the country is hit by the novel coronavirus outbreak, in Hangzhou, Zhejiang province, China March 2, 2020. China Daily via REUTERS

By Stella Qiu and Ryan Woo

BEIJING (Reuters) -China's factory gate prices rose at the fastest rate in three and a half years in April as the world's second-largest economy gathers momentum after strong first-quarter growth, but economists downplayed the risks to inflation.

Investors globally are increasingly worried that pandemic-driven stimulus measures could spark a rapid rise in inflation and force central banks to raise interest rates and take other tightening measures, potentially holding back economic recovery.

China's producer price index (PPI), a gauge of industrial profitability, rose 6.8% in April from a year earlier, the National Bureau of Statistics said, faster than a 6.5% rise tipped by a Reuters poll of analysts and a 4.4% rise in March.

However, the consumer price index (CPI) rose by a mild 0.9% on year, held down by weaker food prices, and analysts said the rising costs from soaring producer prices were unlikely to be fully passed on to consumers.

"We still expect much of the recent surge in upstream price pressure to prove transitory, with industrial metal prices likely to drop back later this year as a tighter policy stance weighs on construction activity," Capital Economics analysts said in a note.

"We don't think inflation will rise to the point where it triggers a major policy shift" by China's central bank, they added.

Chinese authorities have repeatedly said they will avoid sudden policy shifts that could derail economic recovery, but are slowly normalising policy and clamping down on property speculation in particular.

The sharp jump in producer prices included an 85.8% surge in oil and natural gas extraction from a year ago, while ferrous metals processing rose 30%, said Dong Lijuan, senior NBS statistician in a statement accompanying the data release.

Consumers could see some price rises ahead from a global chip shortage affecting goods such as home appliances, cars and computers, said Iris Pang, Greater China chief economist at ING.

"We believe that the chip price increase has already pushed up prices of fridges, washing machines, TVs, laptops and car prices in April, which increased 0.6%-1.0% month-on-month," she said.

CPI STILL MILD

April's 0.9% CPI increase was up on a 0.4% rise in March, driven mostly by gains in non-food prices as the services sector recovered. It missed analysts' expectations for a 1.0% rise.

Sheng Laiyun, a deputy director at NBS, said on Friday that China's full-year CPI is likely to be significantly below the official target of around 3%.

Sheng attributed China's likely muted inflation to currently slow core inflation, economic fundamentals where supply has outstripped demand, relatively restrained macropolicy support, recovering pork supply and a limited pass-through effect from PPI to CPI.

Food inflation remained weak. Prices dropped by 0.7% from a year earlier, unchanged from the previous month, weighed by falling pork prices as supply increased.

China's gross domestic product (GDP) expanded by a record 18.3% in annual terms in the first quarter as the country recovers from the devastating impact of COVID-19.

Many economists expect China's GDP growth to exceed 8% in 2021, although some warn that continuing global supply chain disruptions and higher comparison bases will sap some momentum in coming quarters.

China's factory-gate prices surge, but CPI growth still modest
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Kaveh Sun
Kaveh Sun May 10, 2021 10:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ok factories jacked up the price. Dont mean a thing when the world is printing to buy.
Joel Schwartz
Joel Schwartz May 10, 2021 10:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The world isn’t printing as fast as prices are increasing. This isn’t stagflation, it’s just inflation. We need to raise interest rates.
David David
David9 May 10, 2021 10:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I told you guys... China is the real Lion...
Investing Man
Investing Man May 10, 2021 10:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lions are bra inless. They cant compr hend real world situations. They have no impact beyond anything directly next to them. So yea, sounds about right.
CHAD TENDIES
CHAD TENDIES May 10, 2021 10:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China is the new world superpower RIP USA
Investing Man
Investing Man May 10, 2021 10:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lol. Your china population is aging snd dying not having been able to even obtain a fraction of the wealth as the poorest households in america.
king michael
king michael May 10, 2021 10:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
GDP is now merely $22 trillion, but national debt has passed $27 trillion. Even Biden just add the same amount of national debt as Trump which is $14 trillion in the next three and half years, the debt will be over 180% of GDP. National bankruptcy is just a few years away. Market is heading to near zero soon.
Mike Chen
Mike Chen May 10, 2021 10:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The duet between US and CHINA will boost up the world economy by spending trillions on infrastructure and unlimited QE. Golden decade era! Full investment is recommended.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email