Price for goods at the factory gate rose in China last month for the second straight month, officials said yesterday, in a sign of strengthening demand in the world’s second-largest economy.
The producer price index (PPI) rose 1.2 percent year-on-year in the month, according to the Chinese National Bureau of Statistics, adding it “rebounded obviously.”
In September, the index ended more than four years of falls, rising 0.1 percent year-on-year and offering some relief to long-standing concerns about deflation.
Chinese firms have for years been battered by falling prices for their goods in the face of chronic overcapacity and weak demand, putting a damper on growth in a key driver of the world economy. Protracted drops in PPI bode ill for industrial prospects and economic growth, as they put off customers — who seek to delay purchases in anticipation of cheaper deals in the future — starving companies of business and funds.
Last month’s figure exceeded economists’ expectations of a 0.9 percent increase in a Bloomberg poll.
“Consumer and producer prices are both rising at a comfortable pace, with deflation fears no longer a pressing concern,” Capital Economics Ltd’s Julian Evans-Pritchard said in a note.
Surging prices for key industrial commodities, particularly coal, appeared to drive the increase, and “the trend will continue for a while until it heads down next year,” Macquarie Securities Ltd Hong Kong-based analyst Larry Hu (胡偉俊) said.
“The readings show that China’s economy has stabilized,” he said.
The consumer price index, a key gauge of retail inflation, matched expectations with an increase of 2.1 percent on the back of rising food, housing and healthcare costs, data showed.
Looking ahead, Evans-Pritchard said the introduction of policies designed to control property prices and loose credit will start to rein in consumer inflation.
Other data have showed a mixed picture of the Chinese economy, as exports sank for the seventh straight month and came in below forecasts.
Overseas shipments fell 7.3 percent year-on-year, while imports also dropped 1.4 percent, the Chinese General Administration of Customs said on Tuesday.
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