Chinese July factory gate inflation rose faster than expected due to rising commodity prices, official data revealed on Monday, adding to pressures on producers already struggling with higher costs.
The producer price index (PPI) grew 9.0% year on year, matching highs seen in May, the National Bureau of Statistics (NBS) said. In a separate statement the agency said the consumer price index in July rose 1.0% from a year earlier, compared with a 1.1% gain in June and below the government target of around 3% this year.
The PPI, a benchmark gauge of a country’s industrial profitability, inched up 0.5% month on month, accelerating from a 0.3% uptick in June.
Core CPI rose 1.3% in July from a year ago. Food prices fell 3.7% from a year ago, mainly due to a 43.5% plunge in pork prices.
China’s economic recovery from the Covid-19 pandemic is slowing as businesses face higher commodity prices and global supply chain bottlenecks. The jump in factory-gate inflation was largely due to higher commodity prices, in particular oil and coal.
Beijing has been trying to stymie the surge in commodity prices by releasing inventory from the nation’s strategic reserves, clamping down on hoarding and speculation, and ordering state-owned enterprises to limit their exposure to overseas commodities markets.
The amount of cash that banks must hold as reserves in July was cut, releasing around 1 trillion yuan ($154.40bn).
Increasing cases of the more-infectious Delta variant of the coronavirus across Asia combined with recent heavy rainfall and floods in some Chinese provinces have also disrupted economic activity.
