China's factory prices soar in May but consumers avoid cost surge


China's factory gate inflation rose at the highest rate in over a decade last month, official data showed Wednesday, as the world's second-largest economy works to contain a surge in commodity prices.

Factories so far seem to be absorbing costs rather than passing them on to consumers as domestic demand recovers from the strict coronavirus lockdowns imposed last year.

The producer price index (PPI), which measures the cost of goods at the factory gate, exceeded expectations to spike 9.0 percent on-year in May, said the National Bureau of Statistics.

This marks its highest jump since September 2008.

In particular, prices in the oil and natural gas extraction industry rose 99.1 percent from a year ago, said NBS senior statistician Dong Lijuan.

But consumer prices were "generally stable", Dong said.

The consumer price index (CPI), a key gauge of retail inflation, rose less than expected to 1.3 percent on-year, official data showed.

China's CPI has been driven up in recent years by pork prices after an African swine fever outbreak ravaged stocks, but this has since mostly stabilized with boosted supplies of the staple meat.

Dong said Wednesday that "live pig production continued to recover and the pork supply continued to increase".

© 2021 AFP

©2021 GPlusMedia Inc.

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China created the surge in commodity prices by picking a trade fight with Australia. We shall see how long their industries can absorb higher raw material prices before the prices of finished goods have to rise or the companies go bust. Business owners in China are all running scared now, afraid of being the next Jack Ma.

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inflation of global money supply means price rises coming. These price rises will be passed on to global consumers.

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"China's factory prices soar in May but consumers avoid cost surge"

Ridiculous headline - of course prices will be passed to consumers. That's like saying my wife charged a fortune on my credit card yesterday, but I have so far avoided receiving the bill. Inflation is coming, and this is just the start.

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Ridiculous headline - of course prices will be passed to consumers.

Hard to say how much and how soon. Xi Jinping is threatening companies that are seen as taking advantage of rising commodities prices. Every business person in China is now afraid to raise their price even as their costs rise. I agree that at some point something has to give but nobody wants to test the waters and be first. Everyone is looking for a signal from Beijing. None of them wish to be the next Jack Ma.

-1 ( +0 / -1 )

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