China: largest increase in producer prices since late 2008

The rise in producer prices in China was registered in May at its highest level in nearly thirteen years, according to official figures released Wednesday.

The PPI index, which measures the cost of goods leaving the factory, saw a 9% year-over-year increase last month, according to the National Bureau of Statistics (BNS). This is its largest increase since September 2008. This result, much higher than that of April (6.8%), exceeds the average forecast of analysts polled by the financial agency Bloomberg (8.5%) .

The near peak

The cost of raw materials on world markets (oil, metals) combined with the “robust recovery” of activity in China which is pushing up prices, partly explain this level, noted Dong Lijuan, a SNB statistician. . The prices of oil and natural gas extraction have doubled in one year (+ 99.1%), according to the SNB.

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“The rise in producer prices is close to a peak” and will soon subside, believes analyst Julian Evans-Pritchard, of Capital Economics, who expects the price of coal to drop in the near future. and metals.

Falling food costs

For its part, the consumer price index, the main gauge of inflation, rose 1.3% over one year in May, against 0.9% a month earlier. Analysts had expected a significantly higher increase (1.6%). This trend is partly explained by the fall in the cost of food products. The prices of pork, by far the most consumed meat in China, were 23.8% lower last month than they were in May 2020.

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In recent years, pork prices had doubled after an African swine fever epidemic that wiped out the herd. But they have been declining since October thanks to an improvement in the situation. However, all food products are not in the same boat: fresh eggs saw their price in May jump 14.3% over one year.

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Consumer prices were also pulled up last month by transport, thanks to a return to a life close to normal on the front of the coronavirus epidemic. In May, fuel prices were 21.3% higher than a year earlier.

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