Producer prices in China have risen for the first time in 54 months as consumer inflation picked up due to flood damage to key crops boosting food prices.
Factory gate prices rose 0.1 per cent year-on-year in September, according to the National Bureau of Statistics, the first growth reading since January 2012. That was up from a fall of 0.8 per cent the month prior, beating a median forecast from economists predicting a contraction of 0.3 per cent.
Month-on-month producer prices were up 0.5 per cent, up from 0.2 per cent in August.
The bureau attributed the rise to continued cuts to existing stocks and production capacity and prices in the ferrous metal smelting and pressing sectors rising 10.1 per cent and 1.2 per cent respectively, as well as a 4.1 per cent rise in prices for the coal extraction and washing industry.
Consumer prices rebounded after dipping in August, rising to growth of 1.9 per cent year -on-year last month and beating expectations of 1.6 per cent growth. Pork prices, which exert major influence on the headline figure thanks to heavy weightings for food in the basket of goods used in its calculation, rose 5.8 per cent, contributing 0.16 percentage points to the topline figure – slightly less than the previous month as supply increased.
But vegetable prices rose 6.7 per cent, accelerating from a 6.4 per cent rise in August and helping push up food inflation to 2.7 per cent year-on-year, a rise of 1.2 percentage points from a month earlier.
In month-on-month terms prices were up 0.7 per cent compared to just 0.1 per cent in August. The statistics bureau pinned the blame partly on repeated typhoons and flooding that have hit south China since late June, ravaging crops and helping push monthly growth in vegetable prices up 10.7 per cent month-on-month in September.