In September, China’s factory inflation reached a 25-year high.
Last month, China’s factory inflation reached its highest level in a quarter-century, owing to rising commodity costs, with Thursday’s statistics fueling fears that higher prices may spread through supply chains and into the global economy.
The lifting of global sanctions has increased demand for energy at a time when supplies are low, a situation exacerbated by China’s desire to satisfy environmental goals by lowering emissions targets.
The producer price index (PPI), which gauges the cost of goods at the factory gate, touched 10.7%, the highest level since October 1996, according to the National Bureau of Statistics.
In August, the index had already surpassed a 13-year high, showing a jump in commodity costs and increasing pressure on businesses. Many firms have had to shut down due to power outages brought on by emissions reduction targets, rising coal prices, and supply constraints.
Since then, Chinese officials have instructed mines to increase production, as well as energy companies to ensure adequate fuel supply for the winter.
“In September, the price increase of industrial items continued to extend, influenced by factors like as rising coal prices and some energy-intensive industry products,” NBS senior statistician Dong Lijuan said in a statement.
Dong went on to say that 36 of the 40 industrial sectors assessed saw price increases, including coal mining, which increased by 74.9 percent.
For the time being, Sheana Yue, an assistant economist at Capital Economics, says there are “few evidence” that power shortages are seeping into the prices of finished consumer items.
In September, the consumer price index (CPI), a key indicator of retail inflation, was 0.7 percent, down marginally from August.
Pork prices, which earlier fueled a jump in CPI, decreased 46.9% on an annual basis, according to the NBS.
However, Zhiwei Zhang, chief economist at Pinpoint Asset Management, warned that “the risk of stagflation is rising in China as well as the rest of the world” as prices rise and economic development slows.
“The ambitious objective of carbon neutrality continues to exert downward pressure on commodity prices, which will be passed on to downstream companies,” Zhang noted.
Beijing has set a goal of achieving carbon neutrality by 2060 and achieving peak carbon emissions by 2030.
Economists warn of the potential of increasing manufacturing inflation as authorities seek measures to alleviate the energy crisis.
The State Council, the country’s government, said last month that power rates will be allowed to climb by up to 20% against a. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.