China CPI Falls Back to 1% Range... PPI Declines for 5 Consecutive Months

China National Bureau of Statistics March CPI Up 1.5%, PPI Up 8.3%

[Asia Economy Beijing=Special Correspondent Jo Young-shin] While China's Consumer Price Index (CPI) rebounded after three months, the Producer Price Index (PPI) showed a slight decline, creating an unusual phenomenon. The PPI, which reflects fixed costs such as raw material prices and wages, is an indicator that can gauge the degree of inflation and serves as a leading indicator of the CPI.

Source: National Bureau of Statistics of China

On the 11th, China's National Bureau of Statistics announced that the Consumer Price Index (CPI) for March rose 1.5% year-on-year.

China's CPI rebounded after staying below 1% for two consecutive months. The monthly CPI in China rose to a yearly high of 2.3% in November last year, then stabilized at 1.5% in December, and 0.9% in both January and February this year.

Despite pork prices, one of the key items influencing China's CPI, remaining at a low level, the CPI rebounded after four months due to an increase in prices of industrial consumer goods. In fact, transportation fuel prices such as oil surged by as much as 24.1% year-on-year, driving the CPI upward.

The PPI, which affects the CPI, rose by only 8.3% last month. China's PPI had soared to 13.5% in October last year amid rising international raw material prices such as coal and severe global supply chain disruptions. Since then, it has shown a declining trend for five consecutive months: 12.9% in November, 10.3% in December, 9.1% in January, 8.8% in February, and 8.3% in March.

Source: National Bureau of Statistics of China

As of the 7th, the wholesale price of gasoline in China was 10,306 yuan per ton (approximately 1.99 million KRW), a 30% increase compared to the beginning of the year. Diesel also rose more than 15%, reaching the highest wholesale price in 10 years.

The limited rise in the PPI suggests that the Chinese government, concerned about inflation, is arbitrarily controlling the real economy, including raw material prices. If cost reflection is not properly implemented, the damage falls entirely on Chinese companies, causing side effects that slow economic growth.

Some analysts suggest that the limited increase in the PPI may be due to manufacturing not operating normally as COVID-19 spread across China, including the Shanghai lockdown. Either way, it seems difficult for China to achieve the government's target of 5.5% growth this year.

This content was produced with the assistance of AI translation services.