High Commodity Prices Drive China’s Factory-Gate Inflation to 13-Year High

Male Construction Worker

China’s factory gate inflation surges to a 13-year high in August driven by rising raw material prices despite government’s efforts to cool them, placing more pressure on manufacturers.

Source: National Bureau of Statistics of China

CSI 300 Index down -0.043%, CNY USD up +0.14%

The producer price index (PPI) increased by 9.5% from a year earlier in August, faster than the 9.0% increase estimated in a Reuters poll and the 9.0% posted in July.

The world’s second-largest economy recovered strongly from last year’s COVID-19 slump but has been losing momentum recently due to the local COVID-19 outbreaks, high raw material prices, tighter property curbs, and efforts to cut carbon emissions.

Commodity prices have been unruly in recent months, hurting the bottom lines of numerous medium and small factories.

China’s coal prices jumped to a record high on Tuesday following supply concerns as key coal regions commenced new rounds of safety checks.

Returns at China’s industrial firms slowed for five consecutive months. But coal and metal prices are likely to drop back as construction activity declines amid property sector restrictions and slowed credit growth.


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