Food costs push China’s CPI higher
Print Edition
CHINESE consumer inflation picked up in October for a second month on higher food prices, while factory-gate inflation also rose as prices of steel and coal increased.
China’s Consumer Price Index, a general gauge of inflation, rose 2.1 percent last month year on year, compared with a 1.9 percent gain in September, the National Bureau of Statistics said yesterday. The reading was within the full-year government ceiling for inflation of 3 percent.
Food prices surged 3.7 percent last month, with green vegetables, fishery products and pork prices adding the most, said Yu Qiumei, a senior bureau analyst.
Meanwhile, the Producer Price Index, a factory-gate measure of inflation, rose 1.2 percent from a year ago, compared with a 0.1 percent gain in September.
The PPI has turned inflationary since September, and observers said the gain was fueled by rising commodity prices.
Ding Shuang, chief China economist at Standard Chartered, said the rise in PPI was due to factors such as infrastructure investment and capacity cut.
Zhao Yang, an economist at Nomura Securities, predicted the “month-on-month PPI inflation to remain positive and the year-on-year PPI to climb higher in the fourth quarter and the first quarter of 2017 given a low base, with PPI likely rising above 3 percent year on year in some months.”
China’s gross domestic product grew by an annual 6.7 percent in each of the last three quarters, with data including last month’s industrial output and companies’ profits showing that the world’s second-largest economy was stabilizing.
However, Harrison Hu, chief China economist at Royal Bank of Scotland Group, pointed to a divergence in the data.
“If you look at those reflecting current business activities such as industrial profits and PPI, they are showing that China’s economy has stabilized. But if you look at some leading indicators, including property sales and newly added credit, they are showing signs of the economy losing steam,” Hu said, as cited by Bloomberg News.
The central bank may ease monetary policy further, but fears about credit risks have kept policy-makers cautious.
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