Factory gate prices in China rose faster than expected in April while consumer prices climbed again as Covid-19 outbreak and lockdown drove prices of food and fuel costs higher.
The producer price index rose 8% from a year earlier compared to 8.3% in March, official data showed Wednesday. Consumer-price growth accelerated to 2.1% from 1.5% in the previous month, faster than a projected 1.8% gain.
Soaring commodity prices squeezed manufacturer’s profit.
Covid outbreaks in China and restrictions intended to contain them have indirectly added to operating costs, making it tougher for factories to maintain production, obtain raw materials and ship out finished goods.
The National Bureau of Statistics, said in a statement, the uptick in consumer inflation was attributable to virus outbreaks and higher global commodity prices.
“Panic buying and stocking among consumers likely also pushed up demand,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management as reported by Bloomberg.
“As supply chain disruption is gradually resolved, inflationary pressure may fade away.”
A 28% jump in fuel costs also contributed to higher consumer prices. Prices of vehicle fuel rose the fastest of any metric within the CPI basket, according to a breakdown provided by the NBS.
Core CPI, which excludes volatile food and energy prices, rose 0.9%, compared to March’s 1.1% increase.
“With Shanghai handling around a fifth of China’s port volume and China accounting for 15% of world merchandise exports, shortages of manufactured goods could intensify, adding to existing global inflationary pressures,” the Fitch economists wrote.
“This channel is likely to outweigh the effect of slower growth in China on global inflation through a weakening of commodity demand and prices.”