China Factory-Gate Inflation Hits  Five-Year High
China Factory-Gate Inflation Hits  Five-Year High

China Factory-Gate Inflation Hits Five-Year High

China Factory-Gate Inflation Hits Five-Year High

Chinese producer prices rose at their fastest pace for five years in November, Beijing said late Friday, fuelling hopes that the world’s factory can export inflation into a lackluster global economy.
The forecast-beating figures mark an acceleration from the previous two months after more than four years of plunging prices as the world’s number-two economy stabilizes. They also come a day after data showing a surprise rise in foreign trade and have led to suggestions the central bank should lift interest rates, Bloomberg reported.
The producer price index rose 3.3% year-on-year last month, the National Bureau of Statistics said, smashing estimates of 2.3% in a Bloomberg News survey. The consumer price index, a key gauge of retail inflation, rose 2.3%, slightly beating expectations of 2.2%.
“China has entered a new inflationary cycle,” Raymond Yeung at Australia & New Zealand Banking Group in Hong Kong, told Bloomberg News. “The next move of the People’s Bank of China should be an interest rate hike, not a cut.”
China is the world’s biggest trader in goods, and its performance affects partners from Australia to Zambia, many of which have been mired in tepid inflation for years, which has in turn caused a drag on the global economy. Chinese firms have been battered by falling prices for their goods in the face of chronic overcapacity and weak demand, putting a damper on growth in the country.
The economy expanded last year at its slowest rate in a quarter of a century as Beijing strives to effect a difficult transition from reliance on exports and state investment to an economy driven by consumers. Protracted falls in factory gate prices are a bad sign for industrial prospects and economic growth because they put off customers—who seek to delay purchases in anticipation of cheaper deals in the future—starving companies of business and funds.
ANZ analysts said the figures showed China had pulled out of years-long period of deflation thanks to rising commodity prices, and predicted that the producer prices would continue to edge up next year. The country is “now a source of global inflationary pressure”, Julian Evans-Pritchard of Capital Economics said in a note.
Loose credit and ample stimulus have stoked domestic demand, driving price increases in property and industrial commodities, he noted. The CPI rise was driven largely by an increase in prices for fresh vegetables, statisticians said, due in part to costs associated with greenhouse growing and a nationwide cold snap.

Short URL : https://goo.gl/5MIuJ7
  1. https://goo.gl/pJTzyP
  • https://goo.gl/ThDwme
  • https://goo.gl/aiBrEL
  • https://goo.gl/zK13Hx
  • https://goo.gl/4idZb5

You can also read ...

Russia Economic Recovery Underway
Retail sales in Russia picked up in April, while real wages...
While China tries to alleviate its demographic crunch, the aging society means a pension shortfall.
Forget that image of sweatshops making all kinds of cheap...
Greece at Crucial Point
Discussions are heating up over future debt repayments for...
Brazil CB Keeps Rates on Hold
Brazil’s central bank considered cutting interest rates last...
In 2017 banks had total mortgage lending of around $352 billion.
High levels of household debt are the greatest risk to Sweden’...
Peru Economy Strengthens
Economic growth in Peru strengthened in the first quarter...
EU Tells Italy to Cut Debt, Warns of Euro Spillover
Italy’s incoming government should aim to cut its heavy public...
Saudi Gov’t Told Not to Boost Spending
The International Monetary Fund urged the Saudi government not...

Add new comment

Read our comment policy before posting your viewpoints