China's producer prices rose 8.4 percent on-year in October as inflation in raw materials led to the highest prices of factory gate goods in eight years, official data showed Thursday. The growth rate in October was 0.8 percentage points higher than in September, the National Bureau of Statistics (NBS) said. Producer price inflation has quickened all year, unaffected by the Beijing's measures aimed at braking the economy.
In the first 10 months of the year, industrial or wholesale prices rose 5.8 percent, compared with a growth rate of 5.5 percent in the first nine months, and 5.2 percent from January to August.
Crude oil prices were a major factor in the jump, rising 41.4 percent in October on an annual basis and up 9.6 percentage points above the September growth rate, the NBS said.
Economists said that as a result they expect to see further increases in the consumer price index over the next six to 12 months.
"I think, going forward, it will gradually pass through to the CPI (consumer price index)," said Deutsche Bank economist Jun Ma.
The government has been trying to cool the booming economy and ease inflation pressures through a series of measures, including loan restrictions and the country's first interest rate increase in nearly a decade.
Last month's rate hike came after statistics showed September CPI was up 5.2 percent year-on-year, following 5.3 percent increases in July and August. Prices rose 4.1 percent for the nine months to September, following an increase of 3.6 percent in the first half and 2.8 percent in the first three months of the year.
Ma is forecasting full year CPI at 4.2 percent. DBS Bank economist Chris Leung said instability in Iraq could trigger another surge in oil prices, further impacting China's production and consumer prices.
"I think the growth rate for producer prices will stay between eight and nine percent over the next few months because oil prices are still high," Leung said.
Crude oil price increases led to surging costs in October for downstream petrochemical product makers, with the cost of polystyrene up 42.7 percent, the NBS said. Coal prices increased 22.2 percent, 1.8 percentage points higher than the rate seen in September, while production materials prices rose 10.9 percent in October from a year earlier.
Ex-factory prices of consumer goods were up 1.7 percent on an annual basis.