China producer prices fall for fifth month

December 10, 2019 12:39
Factory-gate prices in China have dropped for five months in a row, but consumer inflation has seen a spike. Photo: Reuters

Producer prices in China fell in annual terms for the fifth consecutive month in November while consumer prices spiked as food costs climbed, Reuters reports, citing official data released on Tuesday.

The producer price index (PPI), seen as a key indicator of corporate profitability, fell 1.4 percent on year, according to the National Bureau of Statistics (NBS), the report said.

It marked the fifth month in a row for such decline, and compares with a 1.6 percent fall in October.

In contrast, consumer prices rose at their fastest pace in almost eight years, driven mostly by a surge in pork prices as African Swine Fever ravaged the country’s hog herds.

However, core inflation - which excludes food and energy prices - showed only modest pressure.

A milder fall in factory-gate prices in November than in previous months may have been helped by tentative signs of improvement in manufacturing activity, although economists have noted the recovery could be difficult to sustain.

Weak prices were mainly seen in oil and gas extraction and chemical fiber manufacturing sectors.

The consumer price index rose 4.5 percent in November from a year earlier, the fastest pace seen since January 2012, beating analysts’ expectations of 4.2 percent and October’s 3.8 percent rise.

The rise was driven largely by a continued surge in pork prices and other meats. Pork prices more than doubled year-on-year in November, according to the statistics bureau.

Analysts expect pork will remain in high demand as China prepares to celebrate the Lunar New Year, the peak consumption period for the meat.

Last week, the government’s finance ministry announced waivers for some purchases of US pork and soybeans.

For the full year 2019, China is aiming for a CPI target of around 3 percent. The consumer inflation figure stood at 2.8 percent for the first 11 months of the year.

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