PPI beats forecasts on surging oil and raw material costs; CPI rises 0.9%, missing expectations

Containers are stacked at a container terminal at the port of Nanjing in eastern China's Jiangsu Province. [AFP]
Containers are stacked at a container terminal at the port of Nanjing in eastern China's Jiangsu Province. [AFP]

China's producer prices surged to their highest level in more than four years last month, driven by a sharp rise in global oil and raw material costs. Consumer prices continued to climb but fell short of market expectations as weak domestic demand capped the increase. Analysts say the divergence — mounting production cost pressures alongside a sluggish consumption recovery — points to a deepening imbalance in the Chinese economy, one now visible in the country's price data.

China's producer price index rose 5.0 percent year-on-year in September, the National Bureau of Statistics said Wednesday.

The reading exceeded August's 3.8 percent gain and topped the 4.5 percent increase Reuters had forecast. It was also the highest rate of PPI growth since June 2022.

China's monthly PPI had remained in negative territory for more than three years following October 2022, during the COVID-19 pandemic, before snapping a 41-month consecutive decline in March this year with a 0.5 percent gain.

Producer prices in the oil and natural gas extraction sector jumped 24.5 percent from a year earlier. The petroleum, coal and other fuel processing sector rose 21.6 percent, while chemical raw materials and chemical product manufacturing climbed 12.1 percent.

Coal mining and washing posted a 35.3 percent increase, non-ferrous metal mining and dressing rose 21.4 percent, and non-ferrous metal smelting and rolling processing also gained 21.4 percent. Electrical machinery and equipment manufacturing rose 6.2 percent, while computer, communications and other electronic equipment manufacturing climbed 5.8 percent.

By contrast, producer prices fell between 2.0 and 5.3 percent year-on-year in sectors including electricity and heat energy production and supply, automobile manufacturing, non-metallic mineral product manufacturing, pharmaceutical manufacturing, and liquor, beverage and refined tea manufacturing.

Street food vendors in Shanghai, China. [EPA]
Street food vendors in Shanghai, China. [EPA]

China's consumer price index rose 0.9 percent year-on-year in September.

The reading edged up from August's 0.8 percent gain but came in below the 1.0 percent increase Reuters had forecast.

China's CPI had been in negative territory through the third quarter of last year amid deflation concerns before turning positive in October of that year with a 0.2 percent rise.

Gasoline prices surged 16.6 percent in September, a gain 7.3 percentage points wider than in August, adding 0.47 percentage points to the overall CPI increase.

Prices for industrial consumer goods excluding energy rose 1.6 percent in September, though the pace of increase narrowed by 0.2 percentage points from August.

Storage devices (+46.7 percent), tablets (+23.6 percent), computers (+21.8 percent) and mobile phones (+14.9 percent) all posted wider price gains.

Gold jewelry prices rose 22.5 percent, though the rate of increase was 11.1 percentage points lower than in August.

In the services sector, travel prices rose 2.1 percent and medical costs climbed 4.0 percent.

Some food prices declined, with pork falling 10.0 percent, fresh vegetables dropping 8.1 percent, and grains, cooking oil, dairy products and fresh fruit falling between 0.6 and 1.5 percent.

Despite a string of stimulus measures from Chinese authorities, household consumption remains subdued.

Reuters said China's economy continues to show an uneven recovery, relying more heavily on exports than on domestic consumption.


mokiya@heraldcorp.com