Factory gate prices in China rose for the second time since 2012 last month as consumer inflation continued to gain ground.
China’s official producer price index rose 1.2 per cent year-on-year in October, according to the National Bureau of Statistics, marking the second straight month of rising prices after 53 months of annualised contraction finally ended in September. A median forecast from economists had predicted a 0.9 per cent rise.
That comes in spite of official figures released on Tuesday showing China’s exports had contracted for a second straight month in October, suggesting domestic demand is the main driver of price gains for producers.
Month-on-month producer prices rose 0.7 per cent, up from 0.5 per cent in September.
In an explanation released alongside the latest data, the statistics bureau credited ongoing growth in producer prices in part to coal extraction and washing prices, up 15.4 per cent for the period and accelerating 11.3 percentage points from a month earlier. Other sectors tied to heavy industries also performed well, while oil and natural gas extraction swung from contraction to growth of 2 per cent.
Consumer prices continued to rebound from an August dip, accelerating 0.2 percentage points to 2.1 per cent year on year, bang-on analysts’ median forecast. Pork prices, which are heavily weighted in the food-focused basket of goods used to calculate consumer inflation, rose 4.8 per cent. That was 1 percentage point lower from September and added 0.13 percentage points to the headline rate.
Vegetable price growth more than doubled to 13 per cent year on year, helping push food inflation to 3 per cent, up from 2.7 per cent in September. But the statistics bureau attributed the overall rise in CPI chiefly to a base effect resulting from low prices a year prior.
In month-on-month terms, consumer prices fell 0.1 per cent after having risen 0.7 per cent a month earlier.