China's highest producer inflation in over 12 years highlights global price pressures
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
SUNDAY, MAY 29, 2022
SUNDAY, MAY 29, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
China's highest producer inflation in over 12 years highlights global price pressures

Global Economy

Reuters
09 June, 2021, 06:00 pm
Last modified: 09 June, 2021, 07:43 pm

Related News

  • US extends tariff exclusions on Chinese Covid-19 medical products
  • How China’s efforts are advancing global development
  • UN rights chief says she urged China to review counter-terrorism policies
  • Shanghai takes further steps towards reopening, Beijing eases Covid curbs
  • UN rights chief says she urged China to review counter-terrorism policies

China's highest producer inflation in over 12 years highlights global price pressures

Investors are increasingly worried pandemic-driven stimulus measures could supercharge global inflation and force central banks to tighten policy, potentially curbing the recovery

Reuters
09 June, 2021, 06:00 pm
Last modified: 09 June, 2021, 07:43 pm
A woman holding an umbrella rides a shared bicycle past an image of the Chinese flag after the lockdown was lifted in Wuhan, the capital of Hubei province and China's epicentre of the novel coronavirus disease (Covid-19) outbreak, April 10, 2020. REUTERS/Aly Song
A woman holding an umbrella rides a shared bicycle past an image of the Chinese flag after the lockdown was lifted in Wuhan, the capital of Hubei province and China's epicentre of the novel coronavirus disease (Covid-19) outbreak, April 10, 2020. REUTERS/Aly Song

China's May factory gate prices rose at their fastest annual pace in over 12 years due to surging commodity prices, highlighting global inflation pressures at a time when policymakers are trying to revitalise Covid-hit growth.

Investors are increasingly worried pandemic-driven stimulus measures could supercharge global inflation and force central banks to tighten policy, potentially curbing the recovery.

China's producer price index (PPI) increased 9.0%, the National Bureau of Statistics (NBS) said on Wednesday, as prices bounced back from last year's pandemic lows.

The PPI rise in May - the fastest on-year gain for any month since September 2008 - was driven by significant price increases in crude oil, iron ore and non-ferrous metals, the NBS said.

Analysts in a Reuters poll had expected the PPI to rise 8.5% after a 6.8% increase in April.

Shortly after the inflation data, the National Development and Reform Commission said China will closely monitor price movements of commodities and step up price forecasts to maintain market order.

"The worry is PPI may hover at an elevated level for an extended period of time, which would create economic headaches if mid- or downstream firms fail to absorb higher costs," said Nie Wen, chief economist at Hwabao Trust.

The PPI surge has yet to substantially feed through to consumer inflation, meaning the People's Bank of China is unlikely to worry for now.

Consumer prices rose 1.3% in May - the biggest year-on-year increase in eight months - but came in below expectations for a 1.6% gain. Consumer inflation remained well below the government's official target of around 3%.

"Producer price inflation is probably close to a peak...we don't expect (consumer price inflation) to rise much above 2% in the coming quarters. As such, (the data) is unlikely to trigger any shift in monetary policy," said Julian Evans-Pritchard, senior China economist at Capital Economics.

But there are some signs Chinese factories, facing already tight margins, are passing on higher raw material costs to overseas clients, which could reinforce the global inflation loop. read more

The release comes as U.S. inflation data on Thursday is being closely watched by investors, who worry another high reading might put pressure on the Federal Reserve to start thinking about tapering its stimulus.

Chinese coal and resource shares rose after the NBS's producer price inflation data, driving the broader stock market higher (.SSEC), (.CSI300). L2N2NR08S

On a monthly basis, the PPI rose 1.6%, up from a 0.9% uptick in April.

Power plants also stocked up on thermal coal to meet surging electricity demand during summer, resulting in a 10.6% month-on-month increase in prices in the coal mining and washing sector, up from 2.8% the previous month, said Dong Lijuan, senior statistician at the NBS.

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.

China's imports in value terms grew at their fastest pace in 10 years in May, boosted by Chinese purchases of raw materials.

Chinese policymakers have pledged to take measures to cool commodity prices and prevent them from being passed on to consumers.

Recent gains in the yuan had stirred speculation over whether policymakers wanted a stronger currency to offset growing imported price pressures, but the central bank told Reuters this week it will not use the exchange rate as a tool.

NBS data also showed food inflation rose 0.3% in May from a year earlier on higher prices for freshwater fish and eggs, despite still falling pork prices. That compared with a 0.7% drop in food prices in April.

Non-food prices, including airfares, gasoline and diesel prices, accelerated to 5.5%, likely bolstered by China's Labour Day Holiday at the start of May.

On a monthly basis, rising factory input costs have started to be passed onto consumers in the sales of fridges, televisions, laptops, construction materials and summer clothes, but their price gains remained mild, NBS's Dong said.

Top News / World+Biz / China

china / World economy / inflation

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Patients opting to delay crucial treatment amid rising costs
    Patients opting to delay crucial treatment amid rising costs
  • Bankers unhappy with uniform exchange rate
    Bankers unhappy with uniform exchange rate
  • Photo: PID
    Brand Bangladesh as powerful peace promoting country: PM

MOST VIEWED

  • The logo of Gazprom Germania is pictured at their headquarters, in Berlin, Germany April 1, 2022. REUTERS/Fabrizio Bensch
    Russia's Gazprom continues shipping gas to Europe via Ukraine
  • FILE PHOTO: Chinese and US flags flutter near The Bund, before US trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song
    US extends tariff exclusions on Chinese Covid-19 medical products
  • Russian Rouble coins are seen in front of displayed US Dollar banknote in this illustration taken, February 24, 2022. REUTERS/Dado Ruvic/Illustration
    Russia working on new mechanism to service foreign debt
  • A worker sits on a truck being loaded with coal at a railway coal yard on the outskirts of the western Indian city of Ahmedabad, Nov 25, 2013. REUTERS/Amit Dave
    Coal India to import for first time in years as power shortages loom
  • The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans to raise interest rates in March as it focuses on fighting inflation in Washington, US, January 26, 2022. REUTERS/Joshua Roberts
    Fed carrying $330b in unrealized losses on its assets according to Q1 financial statement
  • Picture: Collected
    Sri Lanka to pay $72.6m for 90,000 T Russian oil, minister says

Related News

  • US extends tariff exclusions on Chinese Covid-19 medical products
  • How China’s efforts are advancing global development
  • UN rights chief says she urged China to review counter-terrorism policies
  • Shanghai takes further steps towards reopening, Beijing eases Covid curbs
  • UN rights chief says she urged China to review counter-terrorism policies

Features

Aiman R Khan. Illustration: TBS

Why ‘marry your rapist’ court orders are not always what they seem

1h | Thoughts
Photo: Collected

Top 3 The Ordinary products that give extraordinary results

3h | Mode
Photo: Courtesy

KVN Beauty: Channel your inner Bangalee baddie

3h | Mode
CholPori is planning to roll out their platform in schools so teachers can utilise their tools for the classroom. Photo: Courtesy

CholPori: Where learning is practical, fun and inclusive

2h | Panorama

More Videos from TBS

Photo: TBS

Tips to help you become a successful lawyer

4h | Videos
People bid adieu to Abdul Gaffar Chowdhury

People bid adieu to Abdul Gaffar Chowdhury

4h | Videos
Photo: TBS

Harassment over 'indecent clothing': Women gather at Narsingdi railway station to protest, show solidarity

4h | Videos
Attorney General's suggestion to reduce case clutter

Attorney General's suggestion to reduce case clutter

18h | Videos

Most Read

1
Bangladesh Bank GM, DGM’s designation changed
Banking

Bangladesh Bank GM, DGM’s designation changed

2
Corporates go cashless…tax cut on cards
NBR

Corporates go cashless…tax cut on cards

3
Photo: Courtesy
Panorama

Misfit Technologies: A Singaporean startup rooted firmly in Bangladesh

4
British International Investment (BII) CEO Nick O’Donohoe. Illustration: TBS
Economy

BII to invest $450m in Bangladesh in 5 years

5
Representational image. Picture: Pixabay
Economy

Govt raises regulatory duty to discourage imports of 130 products

6
Photo: Collected
Industry

Spanish recycled cotton producer opens new facility in Bangladesh

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab