China factory prices rise as industries recover from pandemic

BEIJING: Factory prices in China rose in February at the fastest pace in more than two years, official data showed Wednesday, as the country’s vast industrial sector recovered from a coronavirus-induced slump.

The producer price index (PPI), which measures the cost of goods at the factory gate, rose 1.7 percent last month according to data from the National Bureau of Statistics, exceeding analysts’ expectations.

China’s PPI had risen for the first time in a year in January, and February’s rate was the fastest since November 2018.

Analysts expect an increase in global commodity prices to lift inflation further in the world’s second-largest economy in the coming months.

Consumer prices, on the other hand, fell 0.2 percent in February, slightly less than analysts expected, dragged partly by food prices.

Pork prices were 14.9 percent lower than in the same period last year, when the cost of the staple meat soared after China’s herds were ravaged by African swine fever.

But it is unlikely the recent period of consumer price deflation will persist, said Capital Economics senior China economist Julian Evans-Pritchard, who added that the drop in food inflation was caused by shifts in timing of the Lunar New Year.