China inflation risks remain low despite unexpected surge in US, say analysts
- An unexpected rise in US consumer prices last month spooked financial markets, raising speculation about the threat of higher inflation across the globe
- There are signs higher raw material prices are pushing up product prices in China, although analysts do not see that translating into above-target inflation
Chinese inflation is likely to rise moderately in the immediate future, but will avoid an unexpected spike like that seen last month in the United States, analysts said.
Still, a sharp rise in raw material prices recently will put pressure on the profit margins of Chinese firms, with some small companies at risk of going out of business.
US consumer prices rose 0.8 per cent in April from a month earlier, four times what was expected, with the annual rate jumping to 4.2 per cent, the highest since September 2008. The sharp rise in consumer prices spooked financial markets, raising speculation about higher inflation across the globe.
There is already evidence that higher raw material prices are pushing up product prices in China, which could result in China “exporting” inflation through higher costs for its overseas goods.
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