China inflation: factory gate prices jump in February as producers pass on rise in raw materials prices

China’s official producer price index (PPI) rose to 1.7 per cent in February from a year earlier, compared with 0.3 per cent in January

China’s consumer price index (CPI) eased to minus 0.2 per cent in February from a year earlier, compared to minus 0.3 per cent in January

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China’s consumer price index (CPI) eased to minus 0.2 per cent in February from a year earlier, from minus 0.3 per cent in January. Photo: AFP

Published: 9:39am, 10 Mar 2021Updated: 9:30am, 11 Mar 2021

China’s factory gate prices continued to rise in February, as producers passed on rising raw material prices, data released on Wednesday showed.

The producer price index (PPI), which reflects the prices that factories charge wholesalers for their products, rose to 1.7 per cent in February from a year earlier, the highest rate since November 2018 and a sharp increase from the gain of 0.3 per cent in January.

This was above expected, with a Bloomberg survey of analysts predicting a rise to 1.3 per cent.

The price of the means of production rose by 2.3 per cent in February, 1.8 percentage points higher than in January and accounting for the entire rise in the PPI last month, the National Bureau of Statistics (NBS) said.

Prices for commodities like crude oil and copper rose sharply in February on expectations of a strong global economic rebound, helped by the Biden administration’s US$1.9 trillion coronavirus rescue plan.

In China, higher raw material prices, due to higher international prices and to rising domestic demand, were increasingly passed on to end users.

“Due to the continued upward trend of international crude oil prices, prices in domestic petroleum-related industries continue to rise,” the NBS said in a statement.

In addition, “with the increase in domestic demand and the continued rise in international metal commodity prices, the prices of domestic ferrous metal mining and dressing, ferrous metal smelting and rolling processing industry, and non-ferrous metal smelting and rolling processing industry have risen, respectively.”