China Inflation Rises; Factory Gate Inflation Fastest Since 2008

China Inflation Rises; Factory Gate Inflation Fastest Since 2008

China’s consumer price inflation rose less-than-expected in May, while factory gate price growth reached its highest level since 2008 on higher commodity prices.

Consumer prices climbed 1.3 percent on a yearly basis in May versus a 0.9 percent rise in April, data from the National Bureau of Statistics revealed on Wednesday. But this was weaker than the economists’ forecast of 1.6 percent.

The government has set consumer price growth target of about 3 percent for this year.

On a monthly basis, consumer prices were down 0.2 percent compared to the expected fall of 0.1 percent.

Consumer price inflation is likely to rise a bit further as a tighter labor market and easing virus disruptions lift services inflation, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said.

Nonetheless, inflation is not expected to rise much above 2 percent in the coming quarters, the economists said.

Another report from NBS showed that producer price inflation surged to 9 percent in May from 6.8 percent in April. This was also faster than the economists’ forecast of 8.5 percent.

On month, producer prices were up 1.6 percent.

Although producer price inflation reached its highest level since September 2008, on the back of a further rise in global commodity prices, there are some signs in the data that upward pressure on the factory-gate prices of consumer electronics may be starting to ease, economists at Capital Economics, noted.

The material has been provided by InstaForex Company – www.instaforex.com