BEIJING: China’s factory inflation slowed to a 13-month low in December, official data showed on Wednesday, a sign of continued fragility in the world’s second-largest economy. The producer price index (PPI) — an important barometer of the industrial sector which measures the cost of goods at the factory gate — rose 4.9 per cent year-on-year in December, its lowest rate since November 2016, according to China’s National Bureau of Statistics (NBS).
This marked a sharp slowdown from the 5.8 per cent year-on-year rise in November and 6.9 per cent rise in October, but was slightly higher than the 4.8 per cent increase forecast by a Bloomberg News survey of economists.
NBS analyst Sheng Guoqing said the drop was due to declines in five major industries: oil and natural gas mining, ferrous metal smelting, oil processing, non-ferrous metal smelting, and coal mining.
A further decline in the PPI — highly correlated with earnings growth among indebted industrial firms — would “push the People’s (central) Bank to ease monetary policy over the course of this year,” said Julian Evans-Pritchard, analyst at Capital Economics, in a note.
But David Qu of ANZ Research said he expected producer prices to hold up, since “China’s capacity reduction programme for steel and coal will likely be completed in 2018 and extended to other sectors.”— AFP
Oman Observer is now on the WhatsApp channel. Click here
