Categories: Business

China’s factory inflation reaches 26 years as a bite of power crunch

Beijing: China’s factory gate inflation hit a 26-year in October as soaring coal prices amid the electric craft in the industrial heart of the country, the more squeezing profit margins for producers and raise concerns mageflasi.
Producer Price Index (PPI) rose 13.5% from a year earlier, faster than the increase of 10.7% in September, the National Bureau of Statistics (NBS) said in a statement.
That fits with a speed not seen since July 1995 and faster than the 12.4% forecast by analysts in a Reuters poll.
Consumer prices rose also accelerated, albeit at a slower pace of factory gate prices.
Consumer Price Index (CPI) rose 1.5% in October year-on-year, compared with a 0.7% increase in September.
Mounting price pressures complicate the deliberations for the People’s Bank of China, which can now be wary of too rapid an injection of monetary stimulus amid fanning concerns about inflation, even as growth in the world’s second largest economy.
“We are concerned about the pass-through from producer prices to consumer prices,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management, said in a note.
Consumer prices are likely to accelerate in the coming months as the company faced inventory runs out and forced to provide higher costs to customers, he added.
“The risk of stagflation continues to increase.” Slowing economic growth and inflation soaring factory has sparked concerns over stagflation, which could mean China should move cautiously in loosening monetary policy.
“Improving CPI and PPI inflation reduces the probability of PBOC policy rate cuts,” said Ting Lu, chief China economist at Nomura.
Sting Upstream Industries Power Driving Factory gate prices rose, with the coal mining and washing prices rose 103.7% from a year earlier and prices in oil and gas extraction industry rose 59.7%.
Restrictions on carbon emissions and the soaring price of coal, the primary fuel for electricity generation, leading to power rationing and cuts production in recent months, although coal prices have fallen after government intervention.
“Factory gate inflation may be close to the top,” said Julian Evans-Pritchard, senior China economist at Capital Economics, in a note, citing a fall in the price of coal.
Some Chinese food giant has announced an increase in retail prices in recent weeks, due to rising production costs erode profit margins.
Foshan Haitian Graveing ​​and food producer Jiangsu Hengshun vinegar and pure giant frozen foods Fujian anjoy food has all the price increases.
PPI inched 2.5% per month, compared with 21% uptick in September.
Core inflation, which eliminates food and energy prices are volatile, reaching a 1.3% increase in October from a year earlier, higher than the 1.2% uptick in September.

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