China's factory-gate prices rise in September

BEIJING (Xinhua): China's factory prices continued to pick up in September amid booming demand and rising prices of coal and products of energy-intensive industries, official data showed Thursday (Oct 14).

The producer price index, which measures costs for goods at the factory gate, went up 10.7 per cent year on year in September, faster than the 9.5 per cent year-on-year increase registered in August, the National Bureau of Statistics said.

The carryover effect contributed around 1.8 percentage points to last month's PPI growth, the same as that in August. New price increases contributed 8.9 percentage points to the growth, up 1.2 percentage points from one month earlier, NBS data showed.

The faster expansion of PPI last month was due to the price rises in coal and products of some energy-intensive industries, said senior NBS statistician Dong Lijuan.

The price rises of energy raw materials were due to the combined impact of increased demand and declined supply, said Wen Bin, chief analyst at China Minsheng Bank.

With the accelerated recovery of China's economy and the advent of massive coal consumption season of autumn and winter, the demand for coal is relatively strong, he added.

He also noted that recent floods in Shanxi Province restricted coal production and transportation, which also strained the power supply.

Among the major sectors, coal mining and washing, oil and gas extraction, petroleum, coal and other fuel processing, chemical raw materials and product manufacturing, as well as ferrous and non-ferrous metal smelting and processing, contributed around 80 per cent of the increase in PPI inflation in September, Dong said.

On a monthly basis, China's PPI rose 1.2 per cent in September, up 0.5 percentage points from August.

Along with the PPI, NBS data also showed that China's consumer price index, a main gauge of inflation, rose 0.7 per cent year on year in September.

The slower growth was partly driven by a drop in food prices, which declined 5.2 per cent year on year last month. In particular, the price of pork, a staple meat in China, slumped 46.9 per cent from a year earlier.

China has set its consumer inflation target at approximately 3 per cent for the year 2021, according to this year's government work report.