(Bloomberg) -- China’s factory prices climbed for a 12th month as domestic demand remained resilient and the government continued to reduce excess industrial capacity. Consumer prices accelerated.
Key Points
- The producer price index rose 6.3 percent in August from a year earlier, versus an estimated 5.7 percent in a Bloomberg survey and a 5.5 percent July reading
- PPI exceeded all but one of 38 estimates in Bloomberg’s survey of economists
- The consumer price index climbed 1.8 percent, compared with 1.4 percent a month earlier, the statistics bureau said Saturday
Big Picture
Global metal prices soared last month as China’s demand held up on robust investment and construction amid government reforms that may crimp supplies. That market strength underpins worldwide inflation, and helps ease debt burdens on raw-material producers.
Economist Takeaways
“There’s little hope China’s monetary policy could see some relaxation before the end of this year,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “The market has underestimated the inflationary pressure facing China’s economy, although the inflation is unlikely to surge in the foreseeable future. That said, onshore rates are still on the rise.”
“Commodity prices are the main driver” lifting PPI, said Wang Qiufeng, an analyst at China Chengxin International Rating Co. in Beijing. “For the rest of the year, the PPI trajectory will be determined by the tussle between commodity price gains and the high base effect.”
The Details
- Consumer prices rose from the prior month, affected mainly by a 16.2 percent increase for eggs and an 8.5 percent gain for vegetables because of hot weather and rain, the statistics bureau said in a statement
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