China's Feb. PPI rises on global commodity prices, domestic demand

Industry Trends 2021-03-10 181 0


Reference:CGTN | Updated:10 Mar 2021

China's factory gate prices rose for a second month in February propped up by rising global commodity prices and greater domestic demand.

China's producer price index (PPI), a measure of factory gate prices, increased 1.7 percent year on year in February, exceeding expectations of a 1.4-percent increase, data from the National Bureau of Statistics (NBS) showed. 

The country's factory gate prices returned to positive territory for the first time in a year in January.

Prices for petroleum-related industries continued to rise due to the continued increase in international crude oil prices, said Dong Lijuan, a senior statistician with the NBS.

Dong added that a rise in domestic demand and continued rise in international metal commodity prices also pushed up prices in metals industries.

Nomura raised its quarterly inflation forecast for China citing a rise of global commodity prices propped up by the global vaccine rollout, massive fiscal stimulus in developed market economies, ongoing quantitative easing and extremely low interest rates.

The rapid increase in global commodity prices will push up inflation in China as the country is heavily dependent upon imports of commodities including crude oil, minerals for base metals and grains, Nomura's Chief China Economist Lu Ting said in an email to CGTN.

Nomura raised its inflation prediction for China's PPI to 1.8 percent for the first quarter, up from the previous 1.1 percent. Its consumer price index (CPI) forecast for the same period stayed unchanged at 0.1 percent.

China's CPI declined 0.2 percent year on year in February, less than a 0.3-percent drop forecast by Bloomberg economists.

Food prices reversed a 1.6-percent gain in January, falling 0.2 percent in February, data showed.

Affected by the high base in the same period last year, pork prices fell by 14.9 percent, according to Dong. In the non-food category, airline ticket prices fell by 28.2 percent year on year in February, while gasoline prices dropped 5.2 percent.

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