BEIJING: China’s factory-gate inflation dropped to its lowest in a year in May, official data showed Friday, while consumer prices were stable despite Covid-linked transport disruptions.
The producer price index (PPI) – measuring the cost of goods at the factory gate – rose 6.4 percent on-year, National Bureau of Statistics (NBS) figures showed, in line with analyst expectations.
The figure was down from an 8.0 percent rise in April and the lowest since April last year, according to official data.
China exports rebound in May as virus controls ease
“Regions and departments efficiently coordinated epidemic prevention and control in May… ensuring smooth and stable supply chains in key industrial areas,” NBS senior statistician Dong Lijuan said in a statement.
International crude oil prices fluctuated upwards, however, driving up costs in related industries, Dong said.
China’s consumer price index (CPI), a key gauge of retail inflation, rose 2.1 percent on-year in May, the same level as last month and just below analyst expectations.
Domestic prices of flour, grain products and vegetable oil rose “due to high international grain prices”, but Dong said consumer prices remained stable overall, with fresh vegetable costs falling while logistics problems eased.
World food prices hit record highs in March after Russia invaded agricultural powerhouse Ukraine.
Both countries are major exporters of key commodities such as wheat, vegetable oil and corn.
Capital Economics’ chief Asia economist Mark Williams cautioned in a recent note that “there is growing evidence that the disinflationary demand-sapping impact of lockdowns (in China) has outweighed the inflationary impact of supply side disruption”.
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