China Feb producer prices jump 7.8%

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BEIJING: China’s factory gate prices rose at the fastest pace in more than eight years in February, official data showed Thursday, fuelling hopes the country may export inflation to the global economy.

The producer price index (PPI) increased 7.8 percent year-on-year, according to the National Bureau of Statistics (NBS), marking the sixth straight month of rises and beating economist expectations of a 7.7 percent jump in a Bloomberg poll.

It was the fastest growth rate since September 2008 and marked an acceleration from the previous five months, raising hopes that the pick-up in prices in the world’s top trading nation could filter through to other economies.
The on-year rise in producer prices is partly due to the comparison with a low figure last year, when prices saw a “sharp decrease” in February, NBS analyst Sheng Guoqing said in a statement.

Increases in oil and natural gas exploitation, coal mining as well as metal smelting also contributed to the expansion, he added.


The figures follow upbeat reports on China’s fourth-quarter economic growth as well as February factory activity and imports that were driven by higher commodity prices.

The “strange reflation” helps “corporations by allowing them to push up prices and generate the needed revenues to cover their very high debt burden”, said Natixis analyst Alicia Garcia Herrero.

But the soaring PPI, which “may have already peaked”, did not push CPI up “because there is no recovery in demand yet”, Zhou Hao with Commerzbank AG told Bloomberg.

The consumer price index (CPI) rose 0.8 percent last month, missing the 1.7 percent increase estimated by economists and marking its slowest growth in two years.

Looking ahead, authorities will likely prioritise controlling credit risks over restraining inflation, given that consumer prices have still not breached policy makers’ “comfort zone”, Julian Evans-Pritchard of Capital Economics said in a note.

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