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He Huifeng

A major benchmark of China’s factory-gate prices continued to rise last month, as the energy shock linked to the US-Israel war on Iran weighs on producers in the world’s second-largest economy.
After returning to growth for the first time in more than three years the month before, the producer price index (PPI) recorded a higher-than-expected year-on-year increase of 2.8 per cent in April, according to the National Bureau of Statistics (NBS).
This followed March’s 0.5 per cent year-on-year increase, which had also reflected imported inflationary pressures in energy-intensive sectors such as chemicals and fuels.
Economists polled by the financial data provider Wind had forecast a 1.53 per cent uptick.
The April reading points to a further pass-through of elevated global energy costs into domestic prices, underscoring the risks that external volatility places on Beijing’s energy security.
The consumer price index (CPI) – a crucial gauge of inflation – rose 1.2 per cent year-on-year last month, higher than the 0.95 per cent forecast in the Wind poll and March’s increase of 1 per cent.
Dong Lijuan, a senior statistician at the bureau, said domestic energy prices climbed 5.7 per cent, which he attributed to volatility in global crude, which contributed an increase of 0.39 percentage points to the month-on-month CPI rise.
Apart from the shift in global crude prices, factory-gate prices also rose due to increased demand in certain industries, Dong said, citing a surge in computing power demand that has led to a price rise of over 20 per cent in optical fibre manufacturing.


The PPI increase also reflects the sustained effects of China’s campaign to curb vicious intra-industry competition that sent prices plummeting in select sectors, Dong said, pointing to the rising prices of lithium-ion batteries.
Core inflation, which strips out volatile food and energy prices, rose 1.2 per cent year-on-year in April, compared with 1.1 per cent in March and 1.3 per cent in February, which was the highest monthly reading in more than three years.
The figures for last month suggest a continued, if fragile, stabilisation in the underlying demand for consumer spending, and come as Beijing continues to roll out subsidies and other measures to meet its 2 per cent annual target for inflation.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, pointed to signs of stabilisation in the property market, saying transactions had started to pick up in some first-tier cities. “It shows the rising inflation is not only due to energy prices,” he said.
Zhang added he expected oil prices and momentum in the export sector to stay elevated for the next few months, at minimum, with the inflationary pressure potentially persisting in the short term.
The structural divide within the CPI basket remains stark. Driven by the impact of the Iran war on international crude markets, energy-related CPI for transport tools recorded a steep increase of 17.4 per cent year-on-year in April, compared with 3.4 per cent in March.
Food prices showed a more mixed picture, falling by 1.6 per cent year-on-year, after a 0.3 per cent year-on-year growth figure in March.
Dong noted pork prices fell 15.2 per cent, widening the decline by 3.7 percentage points compared with March and dragging down the broader CPI by about 0.29 percentage points.


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Factory-gate prices increased 2.8 per cent last month and consumer prices were up 1.2 per cent, surpassing expectations as fuel costs rise


Factory-gate prices increased 2.8 per cent last month and consumer prices were up 1.2 per cent, surpassing expectations as fuel costs rise.


China’s producer, consumer inflation up in April as Iran war pressures persist

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Factory-gate prices increased 2.8 per cent last month and consumer prices were up 1.2 per cent, surpassing expectations as fuel costs rise

Factory-gate prices increased 2.8 per cent last month and consumer prices were up 1.2 per cent, surpassing expectations as fuel costs rise