China pro­ducer prices rise for sec­ond month

The Myanmar Times - - International Business -

PRICE for goods at the fac­tory gate rose in China for the sec­ond-straight month in Oc­to­ber in a sign of strength­en­ing de­mand in the world’s sec­ond­largest econ­omy.

The pro­ducer price in­dex (PPI) rose 1.2 per­cent year-on-year in the month, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics (NBS), adding it “re­bounded ob­vi­ously”.

In Septem­ber, the in­dex ended more than four years of falls, ris­ing 0.1pc and of­fer­ing some re­lief to long­stand­ing con­cerns about de­fla­tion.

Chi­nese firms have for years been bat­tered by fall­ing prices for their goods in the face of chronic over­ca­pac­ity and weak de­mand, put­ting a damper on growth in a key driver of the world econ­omy.

Pro­tracted drops in PPI bode ill for in­dus­trial prospects and eco­nomic growth, as they put off cus­tomers – who seek to de­lay pur­chases in an­tic­i­pa­tion of cheaper deals in the fu­ture – starv­ing com­pa­nies of busi­ness and funds. Oc­to­ber’s fig­ure ex­ceeded econ­o­mist ex­pec­ta­tions of a 0.9pc in­crease in a Bloomberg poll.

“Con­sumer and pro­ducer prices are both ris­ing at a com­fort­able pace, with de­fla­tion fears no longer a press­ing con­cern,” Ju­lian Evans-Pritchard of Cap­i­tal Eco­nomics said.

Surg­ing prices for key in­dus­trial com­modi­ties, par­tic­u­larly coal, ap­peared to drive the in­crease, and “the trend will con­tinue for a while un­til it heads down next year”, Larry Hu of Mac­quarie Se­cu­ri­ties told Bloomberg.

“The read­ings show that China’s econ­omy has sta­bilised.”

The con­sumer price in­dex, a key gauge of re­tail in­fla­tion, matched ex­pec­ta­tions with an in­crease of 2.1pc on the back of ris­ing food, hous­ing and health care costs. –

‘The read­ings show that China’s econ­omy has sta­bilised.’ Larry Hu Mac­quarie Se­cu­ri­ties

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