Millennium Post

China factory-gate price rise fans global inflation hopes

Chinese factory-gate prices climbed for a fifth straight month in January, the government said on Tuesday, fuelling hopes the world's biggest goods trader can export much-needed inflation to the global economy.

The surge, as well as a pick-up in consumer inflation, is the latest sign a slowdown in the Asian giant could be coming to an end, although the outlook is clouded by concerns that Donald Trump will press ahead with a protectionist agenda.

The producer price index (PPI) hit 6.9 per cent, according to the National Bureau of Statistics (NBS), well up from December's 5.5 per cent and outstripping forecasts of 6.5 per cent in a Bloomberg News survey. Consumer prices rose 2.5 per cent, slightly above estimates.

An increase in global crude prices boosted prices in oil and natural gas exploitation, which contributed to the expansion, NBS analyst Sheng Guoqing said in a statement.

While the increase in commodities prices, as well as Chinese New Year spending, helped the increase, PPI has been rising since September when it snapped a four-year streak of declines.
With China being the world's leading trader, a pick-up in prices would filter through to the global economy, which has been mired in tepid inflation or deflation for years.

Weak inflation is bad for industrial prospects and economic growth because customers delay purchases in hopes of yet-cheaper deals in the future, starving companies of business and funds. The readings were the latest in a positive series of figures for the world's number two economy.

Data showed last week that exports and imports surged more than expected in January, while manufacturing activity also continued to grow.
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