Home Commodities China Factory Inflation Moderates as Commodity Prices Cool

China Factory Inflation Moderates as Commodity Prices Cool

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(Bloomberg) — China’s factory-gate inflation moderated in May as global commodity prices eased, while Covid restrictions kept consumer inflation in check.

The producer price index rose 6.4% last month from a year earlier, National Bureau of Statistics data showed Friday. That compares to 8% growth in April, and it was in line with economist expectations.

Consumer prices, meanwhile, rose 2.1%, just under the median forecast of a 2.2% increase in a Bloomberg survey of economists, and unchanged from April.

The moderating inflation came as Covid outbreaks and controls were eased in May. Indexes measuring activity in the manufacturing and non-manufacturing sectors still contracted, but less so than in April.

Global commodity prices aren’t as high as they were earlier this year when the war in Ukraine broke out, but costs remain elevated, and the Covid outbreaks in China have added to operating costs, weighing on factories that are trying to obtain raw materials and ship out goods.

While faster inflation is unlikely to have a big impact on monetary policy in the short term, there are some concerns that could drive costs higher. A rally in Chinese pork prices that began in mid-March may pose an inflationary threat, making it tougher to kickstart the economy.

©2022 Bloomberg L.P.

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