China’s factory-gate prices rise for first time in 3 years as Iran war bites
The producer price index rose by 0.5 per cent in March, the first increase since 2022, as soaring global commodity prices affected Chinese firms
China’s factory-gate prices rose for the first time in more than three years in March, in an early sign that the US-Israel war on Iran is starting to affect producers in the world’s second-largest economy.
The producer price index (PPI) – a measure of factory-gate prices – increased by 0.5 per cent year on year in March, according to data released by the National Bureau of Statistics on Friday.
The result broke a long deflationary period stretching for 41 consecutive months, with rising global commodity prices driven by the war and a string of recent policy measures by Beijing likely behind the turnaround. Economists polled by the financial data provider Wind had forecast a 0.46 per cent uptick.
Meanwhile, China’s national consumer price index (CPI) – a crucial gauge of inflation – also rose by 1 per cent year on year in March, though the reading fell short of market expectations for a 1.26 per cent increase per Wind’s poll.
Dong Lijuan, a senior statistician at the bureau, said the year-on-year rise in the PPI was partly a result of imported inflation, which pushed up prices or narrowed declines in related sectors.
“Domestic supply-demand conditions in some industries have also improved, supporting a rebound in prices,” Dong said in an official statement.
But March’s 1 per cent month-on-month jump in the PPI still represents a step-change: the 0.6-percentage-point increase over February is the fastest growth recorded in 48 months, a sign that the turnaround is being driven by more than underlying demand.