China’s consumer inflation at eight-year high, but factory gate prices stay subdued
- The consumer price index (CPI) rose by 5.4 per cent in January from a year earlier, up from a 4.5 per cent gain in December
- China’s producer price index, a measure of the prices manufacturers charge at the factory gate, rose marginally by 0.1 per cent
China’s consumer inflation expanded at its fastest pace in more than eight years in January, as pork prices soared due to the coronavirus epidemic and stronger demand over the Lunar New Year period, official data released on Monday showed.
The result was above an analyst poll by Bloomberg, which forecast 4.9 per cent growth.
Within the CPI, pork prices jumped 116 per cent, as city lockdowns and transport restrictions due to the coronavirus outbreak hurt supply and demand. Overall food prices jumped 4.4 per cent month-on-month, which lifted the gauge by 0.96 percentage points.
The rise of CPI was mainly due to increased demand over the Lunar New Year and the impact of the virus, and also due to a lower base last year as the Chinese holiday was in February 2019, the NBS said in a statement.
“The virus outbreak has rewritten the supply and demand story in China, with supply staying at a relatively low level except for the medical sector and demand also falling,” said Tommy Xie, an economist at Oversea-Chinese Banking Corporation in Singapore.
“Prices will likely continue to rise due to weak supply,” and China is likely to export inflationary pressures globally, as demand will fall faster than Chinese supply does, he said.