Rising prices of coal and other commodities have driven up inflation, expected to ease globally in the near term
The reading beat the 10.4% forecast made among economists surveyed by the journal and surpassed the previous high of 10.1% in August 2008. This is the highest level since 1996, when Chinese authorities began releasing the data.
Bureau of Statistics spokesman Dong Lijuan said on Thursday that the record increase was mainly due to rising coal prices and some energy-intensive products such as non-ferrous metals, steel and chemicals.
The steep rise in factory-gate prices in China exceeded the expectations of many economists, raising fears of a recession, when prices continue to rise during periods of slow growth. China’s economic momentum has slowed in recent months amid slow credit growth and tighter regulations. Higher prices of goods produced in China, coupled with massive delays in global shipping, could add to inflationary pressures in the US and other Western countries, which are grappling with rising oil and natural gas prices.
“We see an increasing risk of a deadlock in China as well as the rest of the world,” said Zhiwei Zhang, an economist at Pinpoint Asset Management in Shanghai. He said Beijing’s goal of achieving carbon neutrality has put “continuous pressure on commodity prices”.
Beijing’s aggressive energy-efficiency campaign has led to the closure of several high-polluting coal mines, while a decline in imported coal from countries including Australia, Mongolia and Indonesia has exacerbated shortages. This week, floods hit northern Shanxi province, where about a third of China’s coal is produced, slashing supplies.
While Chinese officials have reopened some coal mines and raised electricity rates in recent weeks to encourage coal-fired power plants to address power shortages, economists say the measures are likely to be effective. This will take time to happen and hence coal prices are likely to remain elevated. next month or two.
Thermal coal futures, the most actively traded on the Zhengzhou Commodity Exchange, jumped 60% in September and continued to climb from October to today. On Wednesday, it touched a record equivalent to $255 a tonne.
High industrial inflation hit China’s manufacturing industry, as Beijing’s increasingly heavy-handed regulations stifled growth in areas including real estate and Internet risk. China’s new credit loans fell short of expectations in September.
It also means that Chinese manufacturers, already affected by the high costs of other materials and power rationing, could either cut production or pass on more costs to Western consumers, whose toys and electronic gadgets As the appetite for goods is stronger than ever. Christmas shopping season. Economists say that last month, the country’s exports rose 28% in US dollar terms from a year earlier, driven in large part by higher prices rather than volume.
“China may also export inflation through global supply chains,” Citigroup economists wrote in a research note to clients last Friday.
Meanwhile, China’s consumer inflation rose 0.7% in September from 0.8% the previous month, pointing to sluggish domestic demand.
Prices of pork, a staple meat in China, fell 47% last month from a year ago, while non-food prices such as gasoline prices rose.
Some economists predict that the higher electricity costs assumed by factories and businesses will further fuel industrial inflation and ultimately lead to consumer inflation.
China allowed a rise in electricity prices for industrial users by up to 20% compared to a previous 10% cap, potentially boosting the headline producer-price index by 12% in October or November and reducing consumer inflation by 0.5 percentage points. added. Estimates by Zhaopeng Jing, a strategist at ANZ.
Persistent cost pressures make it even more difficult for China’s central bank to manage inflation.
“Given the growing uncertainty about the global inflation outlook, Chinese policymakers face obstacles to further easing,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities.
—Bingyan Wang contributed to this article.
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