China’s May producer inflation picks up for second time

June 10, 2018

China’s producer inflation picked up for the second month in a row in May, buoyed by stronger commodity prices, suggesting the world’s No.2 economy has retained growth momentum despite curbs on pollution and rocky trade relations with the United States.

Annual consumer inflation held steady in May from the previous month, as food prices remained largely stable, official data also showed on Saturday.

The producer price index (PPI) rose 4.1 percent in May from a year earlier, compared with an acceleration to 3.4 percent in April, according to the National Bureau of Statistics (NBS).

On a month-on-month basis, the PPI rose 0.4 percent in May, compared with a 0.2 percent decline in April.

Analysts polled by Reuters had expected May producer inflation would pick up to 3.9 percent bolstered by a recent jump in global commodity prices.

Raw material prices jumped 7.4 percent in May from a year earlier, compared with a 5.7 percent increase in April.

The higher factory-gate inflation helped to ease concerns of slowing momentum in the economy as the authorities implement tougher pollution controls on “smokestack” industries and cash-strapped regional governments cut back on big investment projects, curbing demand for building materials.

The rise could also provide a lift to earnings. Chinese industrial firms’ profits rose at their fastest pace in six months in April, with earnings for iron and steel processing firms jumping 260 percent.

The consumer price index (CPI) rose 1.8 percent from a year earlier, in line with expectations which were unchanged from April’s gain of 1.8 percent.

On a month-on-month basis, the CPI declined 0.2 percent.

The core consumer price index, which strips out volatile food and energy prices, rose 1.9 percent in May, down from 2.0 percent in April.

The food price index rose 0.1 percent from a year earlier, after rising 0.7 percent in April. Non-food prices rose 2.2 percent, compared with 2.1 percent growth a month ago.