Explainer | China’s inflation: why was official database updated with more historical data?

China’s producer price index (PPI) rose by 10.7 per cent in September, which at the time was reported as a record high

But a rise to 13.5 per cent in October from a year ago was only reported as the highest since July 1995 and not a record, due to updates to official database

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China’s producer price index (PPI) reflects the prices that factories charge wholesalers for products. Photo: AFP

Published: 12:00am, 17 Nov 2021Updated: 5:00am, 17 Nov 2021

Historically, when it comes to statistics, China’s record is not great. It has been criticised for altering statistics, even by internal economists, and there have been reports of cases in which local officials have altered economic figures in the interest of political gains.

So, why has China added almost four years of figures to its producer price index (PPI) database?

In the middle of October, official data released showed China’s producer price index (PPI) rose by 10.7 per cent in September from a year earlier as a surge in global coal prices pushed up raw material costs. At the time, this was reported as record-high factory gate inflation for China, increasing the risk of stagflation.

Stagflation occurs when an economy is hit by slow growth – China’s economy expanded by just 4.9 per cent in the third quarter – as well as by high inflation and unemployment.

The reading in September was the highest since the start of the National Bureau of Statistics (NBS) database in October 1996 after the index hit 10.0 in August 2008 and 10.1 the following month.

Then in October, China’s PPI, which reflects the prices that factories charge wholesalers for products, rose by 13.5 per cent in October from a year earlier, up from 10.7 per cent in September, the NBS said.

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