China’s factory-gate inflation last month was higher than expected, official data showed yesterday, as Russia’s war on Ukraine pushes up oil prices while a domestic COVID-19 outbreak strains food supplies and consumer costs.
The producer price index (PPI) — measuring the cost of goods at the factory gate — grew 8.3 percent year-on-year, the Chinese National Bureau of Statistics data showed.
This was slightly more than a Bloomberg poll of economists expected, while the PPI also rose month-on-month.
Photo: AFP
“Geopolitical and other factors have pushed global commodity prices to continue increasing, driving the prices of oil, non-ferrous metals and other related industries to rise further domestically,” NBS senior statistician Dong Lijuan (董莉娟) said in a statement.
China’s consumer price index (CPI), a key gauge of retail inflation, last month rose more than expected as well, by 1.5 percent year-on-year, the statistics agency said.
Although consumer demand eased after festive periods earlier in the year, some food prices have risen due to “rising international prices of wheat, corn and soybeans” and domestic COVID-19 outbreaks, Dong said.
This came as world food prices last month hit an all-time high following Russia’s invasion of Ukraine, an agricultural powerhouse, a UN agency said.
Russia and Ukraine make up a massive share of exports in major commodities such as wheat, vegetable oil and corn.
Australia & New Zealand Banking Group Ltd senior China strategist Xing Zhaopeng (邢兆鵬) said that energy prices had “become the major driver for CPI and PPI.”
“CPI inflation could rise further in April as households across China have been stocking up on food and other necessities after taking lessons from the fallout of Shanghai’s lockdown,” Nomura Holdings Inc chief China economist Lu Ting (陸挺) said.
“Due to lockdowns and transport disruptions in northeast China, the largest grain production base in China, this year’s spring farming might have been delayed and the risk of a food shortage might rise in the second half,” Lu said.
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