China’s producer price PPI exceeds consumer CPI the most

China’s producer price PPI exceeds consumer CPI the most

Employees work at a truck production plant in Zhangjiakou, north China’s Hebei Province, June 9, 2021.

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BEIJING – Chinese factories face the biggest gap on record between the rate at which producer and consumer prices are rising.

Selling prices to individuals remain fairly stable, while production costs soar. This reduces the money that manufacturers can make.

from China the producer price index rose 9% in May a year ago – the fastest since 2008 – as commodity prices rose, while the consumer price index rose 1.3%, the National Bureau of Statistics said on Wednesday.

The difference between the two reached 7.7 percentage points, the highest on record, surpassing the previous peak by 7 percentage points in 2017.

The growing gap affects heavy consumers of raw materials the most, Larry Hu, chief China economist at Macquarie, said Wednesday in a report. He noted that car, ship and aircraft manufacturers are suffering revenue losses.

On the other hand, coal miners and steel producers are profiting from soaring commodity prices, according to the report.

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Hu expects the gap between producer and consumer price indices to narrow as commodity prices retreat and the global economic recovery is driven more by demand for services than for goods. .

Four years ago, commodity prices soared due to China’s production cuts. Economists have said this round of increases is largely due to a recovery in the global economy after the coronavirus pandemic. China remains the largest user of many commodities such as iron ore and copper.

– CNBC Yen Nee Lee contributed to this report.

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