Update | Positive signs as China’s prolonged industrial deflation finally ends after demand grows for coal, steel
Numbers have risen after 54 months, with producer price index increasing 0.1 per cent compared with September last year
Factory gate prices unexpectedly rose in September – ending a period of industrial deflation that lasted for 54 months as demand for industrial goods, including coal and steel, recovered in the world’s second biggest economy, official data showed on Friday.
A rise in industrial prices is a sign of an improved business climate for China’s factories, which have been struggling with lower selling prices of their products in the past four and half years.
Mainland banks have pumped an unprecedented amount of credit into the economy in recent years, but the funds were often sucked up by state-backed companies to repay debts and to inflate asset prices, leaving the nation’s vast number of factories and manufacturers struggling amid razor-thin profit margins and weak demand.
The index’s return to positive territory is a good sign. It shows that economic recovery is gaining a firmer footing, as we have seen since August
However, the September data shows that the situation has started to change.