Chinese Consumer Prices Rise While Producer Price Increase Remains Limited (Comprehensive)

Oil Prices Lead Increase, Pork Prices Stable Prevented Surge Above 2%
China Also Affected by Russia-Ukraine War...Global Inflation Concerns Grow

[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.

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

Source: National Bureau of Statistics of China

China's CPI rebounded after staying below 1% for two consecutive months. China's monthly CPI 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 the CPI, remaining at a low level, the CPI rebounded after four months due to an increase in industrial consumer goods prices.

In fact, transportation fuel prices such as oil surged by as much as 24.1% year-on-year, driving the CPI upward.

Specifically, gasoline and diesel rose 24.6% and 26.9% year-on-year, respectively, while liquefied natural gas increased by 27.1%.

Additionally, transportation and communication rose 5.8%, education 2.6%, and culture and entertainment 2.6%, with transportation and service-related sectors leading the increase. Among food ingredients, fresh vegetables, eggs, and fresh fruits rose 17.2%, 7%, and 4.3%, respectively.

The National Bureau of Statistics explained that pork prices fell 41.4% year-on-year last month, impacting the CPI by about 0.83 percentage points.

With Russia's invasion of Ukraine causing international oil prices to rise, the Chinese economy has also come under the influence of the war.

The PPI, which affects the CPI, rose by only 8.3% last month. China's PPI had surged 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, China's wholesale gasoline price 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.

However, if cost reflection is not properly implemented, the damage will fall entirely on Chinese companies. This results in side effects that slow economic growth.

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

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