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China’s producer prices grew at the fastest pace in more than 5 years last month as consumer inflation climbed higher on food and fuel costs.
The fifth consecutive month of expansion for China’s producer price index reported by the National Bureau of Statistics came in at 6.9 per cent, the fastest pace since August 2011 and beat a median forecast of 6.3 per cent from economists surveyed by Reuters.
In month-on-month terms producer prices rose 1 per cent, the fastest rate since February of last year.
The statistics bureau noted that 33 out of the 40 industries tracked by the gauge saw prices rise in January. But growth was concentrated primarily in the same sectors as in previous months, with oil and gas extraction, coal extraction and washing, smelting and processing of ferrous and non-ferrous metals, petroleum processing and chemicals and chemical goods production together accounting for 5.7 percentage points of the headline figure.
The country’s consumer prices outperformed as well, as year-on-year price growth rose 0.4 percentage points from December’s level to 2.5 per cent last month, just above a median forecast of 2.4 per cent. The bureau estimated 1.5 percentage points of the total came from a base effect of low prices in January 2016, while 1 percentage point was due to new price growth.
Of the headline growth rate of 2.5 per cent, 0.75 percentage points came from rising food prices, a sub-index for which rose 2.5 per cent and which are heavily weighted in the basket of goods used to calculate consumer inflation in China . Pork prices were the largest component, alone responsible for 0.19 percentage points.
Transportation and communication costs rose 2.3 per cent, adding 0.17 percentage points to the headline figure as the cost of fuel grew 16.5 per cent compared to a year earlier thanks to a recovery in the price of oil.
In month-on-month terms, consumer prices rose 1 per cent, a marked jump from 0.2 per cent in December and besting expectations of 0.7 per cent growth.