China’s Producer Price Index (PPI) has reached its highest level in 13 years. It has been impacted by policies such as the global economic recovery and dual regulation of energy consumption in China. Despite its significance as a signal of inflation, the increase in consumer prices has been contained.
According to China’s National Bureau of Statistics on 9, China’s PPI rose 9.5 percent in August from a year earlier. This is the highest figure since August 2008. Market expectations were exceeded by 9.0%, and the increase amounted to 0.5 percentage points from the previous month.
China’s Consumer Price Index has been negative since February last year (-0.4%), then rose 0.3% in January, 1.7% in February, 4.4% in March, 6.8% in April, 9.0% in May, 8.8% in June and 7% in July.
PPI is an inflation indicator that shows changes in the price of goods produced from raw materials and labor in China. The PPI measures price changes from the consumer’s perspective. Consumers pay higher prices for goods when producers spend more on raw materials and labor. Therefore, the PPI is also considered a leading indicator of the Consumer Price Index (CPI), and a decrease in supply and an increase in prices are considered typical indicators of inflation.
August’s PPI was mainly affected by rising prices for raw materials such as coal, chemicals, and steel. Prices of industrial raw materials rose 18.3 percent, and prices of basic necessities rose 0.3 percent. In order of importance, coal mining (57.1%), petroleum and natural gas extraction (41.3%), petroleum and coal processing (35.3%), and black metal mining (46.1%). Chemical fiber manufacturing (24.0%), etc., had a strong upward trend.
In contrast, the consumer price index (CPI) increased by only 0.8% in the same month as a year ago.
Compared to the previous month, it decreased by 0.2 percentage points. Food and energy prices were excluded from the core CPI, which rose 1.2 percent. Food prices fell 44.9 percent, resulting in a decline in the overall CPI.