(National Bureau of Statistics) China’s producer price index rose by 9.5% in August from last year, more than expected and July’s 9.0% gain. The increase was the fastest in 13 years.
Coal mining and washing sector prices increased by 57.1% in August from last year, driving the factory prices the most.
The increase in factory gate inflation is a blow to China, which has been trying to tame roaring material prices.
Continued surge in material prices has seen earnings of China’s industrial firms fall for five consecutive months.
Economists expect metal and coal prices to fall again once construction activity slows, amid easing credit expansion and restrictions in the property market.
The gains in producer prices happened, even as the consumer price index in August was reported to have gained by 0.8% from 2020, compared to expected 1.0% gain. Service sector activity fell to the lowest since the first wave of the pandemic in April 2020.
Analysts see China maintaining a prudent monetary policy, with a slight loosening for the remainder of the year. Consumer prices are expected to stay little changed.
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