Chinese factory-gate prices climbed for a fifth straight month in January, the government said Tuesday, fuelling hopes the world's biggest goods trader can export much-needed inflation to the global economy. The surge, as well as a pick-up in consumer inflation, is the latest sign a slowdown in the Asian giant could be coming to an end, although the outlook is clouded by concerns that Donald Trump will press ahead with a protectionist agenda.
The producer price index (PPI) hit 6.9 percent, according to the National Bureau of Statistics (NBS), well up from December's 5.5 percent and outstripping forecasts of 6.5 percent in a Bloomberg News survey. Consumer prices rose 2.5 percent, slightly above estimates.
An increase in global crude prices boosted prices in oil and natural gas exploitation, which contributed to the expansion, NBS analyst Sheng Guoqing said in a statement. While the increase in commodities prices, as well as Lunar New Year spending, helped the increase, PPI has been rising since September when it snapped a four-year streak of declines. With China being the world's leading trader, a pick-up in prices would filter through to the global economy, which has been mired in tepid inflation or deflation for years.
Weak inflation is bad for industrial prospects and economic growth because customers delay purchases in hopes of yet-cheaper deals in the future, starving companies of business and funds. China "will contribute positively to global inflation" this year, Brian Jackson of IHS Global Insight told AFP. But its impact on prices will be blunted by the weakness of the yuan, he added. The readings were the latest in a positive series of figures for the world's number two economy.
Data showed last week that exports and imports surged more than expected in January, while manufacturing activity also continued to grow. That came after news that economic growth picked up in the final three months of 2016, although over the year the GDP growth rate was the slowest for more than a quarter of a century. But there are concerns about possible future trade tensions as Trump settles into the White House. He has promised to declare China a currency manipulator and threatened to slap punitive tariffs on its goods.
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