China producer price growth hits 8-year high as early spring depresses consumer inflation

Listen to this article

00:00
00:00

China’s producer price growth rose to the fastest pace in more than eight years last month, while consumer inflation softened markedly thanks to a surprise bumper crop of fresh vegetables, spurred to growth by unseasonably warm weather.

The sixth straight month of expansion for China’s producer price index reported by the National Bureau of Statistics came in at 7.8 per cent, the fastest pace since September 2008 and barely edging out a median forecast of 7.7 per cent from economists surveyed by Reuters.

In month-on-month terms, however, producer price growth softened to 0.6 per cent, down 0.2 percentage points. That was due in part to a fallback in price rises for oil and gas extraction, coal extraction and coal washing, which together pulled down the headline figure by just over a quarter of a percentage point.

Consumer price growth saw a marked fall, meanwhile, as the official consumer price index registered year-on-year rise of 0.8 per cent, down from 2.5 per cent in January and less than half expectations of 1.7 per cent.

In month-on-month terms, consumer prices actually fell 0.2 per cent, well below a forecast of 0.6 per cent growth.

The statistics bureau chalked the slight month-on-month deflation up to a fall in food prices – particularly vegetables, growth of which was benefiting from unusually warm temperatures across the country last month – as well as a depression in travel prices during the post-lunar new year period. It attributed the year-on-year softening of inflation to elevated pork and fresh vegetable prices last February resulting from a cold snap in early 2016, combined with the unexpected boost to fresh vegetable stocks last month.

The shift in seasonal average temperatures throughout China described by the bureau which facilitated early vegetable growth mirrors that recently reported in the US, where data last month showed spring had arrived 20 days early for much of the country’s south in 2017 due to climate change.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.