China Inflation Exporter(?)... CPI Up 2.1% PPI Up 8.0% (Summary)

Rising Raw Material Prices and Lockdowns Push Consumer Prices Back to 2% Range After 5 Months
PPI Declines but Remains High, Affecting Manufacturing and Export Prices

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's consumer prices have jumped to the 2% range. Due to the rise in international raw material prices caused by the Russia-Ukraine war and lockdowns in major cities such as Shanghai, consumer prices appear to have risen back to the 2% range since November last year.

Producer prices also showed an 8% increase, indicating they are still on a high trajectory.

China's National Bureau of Statistics announced on the 11th that the Consumer Price Index (CPI) for April recorded a 2.1% increase compared to the same month last year.

Photo by National Bureau of Statistics of China

China's CPI surged to 2.3% in November last year amid severe power shortages caused by coal shortages, then fell to 1.5% in December, 0.9% in January, and 0.9% in February this year. During the same period, the Producer Price Index (PPI) showed a high growth rate of 8.3% to 10.3% compared to the same month last year. Since the PPI reflects fixed costs such as raw material prices and wages, it is an indicator to gauge the degree of inflation and a leading indicator of the CPI. However, despite this, the CPI growth rate had been limited.

The National Bureau of Statistics explained that last month, the urban CPI rose by 2.2%, and the rural CPI by 2.0% respectively.

By item, food prices rose by 1.9%, while non-food and consumer goods increased by 2.2% and 3.0%, respectively. Among food items, fresh vegetables surged by 24%, followed by meat at 19.6%, fruit at 14.1%, and eggs at 12.1%.

In particular, pork prices, which are widely consumed by Chinese people, seem to have influenced the CPI increase. Since the end of last year, pork prices, which had halved, have reduced their decline, affecting consumer prices. Last month, pork prices were recorded as 33.3% lower compared to the same month last year.

China's pork prices showed an oversupply trend as livestock farmers rushed to slaughter from the end of last year, fearing rising feed prices. The National Bureau of Statistics predicted that pork prices will return to normal ranges considering factors such as the number of sows. If pork prices were at usual levels, the Chinese CPI would have already exceeded the 3% target set by the Chinese government, a dominant forecast.

Due to the rise in international oil prices, transportation fuel prices also surged by 28.4% compared to the same month last year, pushing up the CPI and showing a pattern where the PPI is transmitted to the CPI.

Last month, the PPI rose by 8.0% compared to the same month last year.

Photo by National Bureau of Statistics of China

Although the PPI has been declining monthly since recording 13.5% in October last year when coal prices surged, it remains at a high level. The National Bureau of Statistics stated that the cumulative PPI from January to April rose by 8.5% compared to the same period last year.

The PPI was directly affected by the rise in international oil and raw material prices. Prices for fuel, electricity, and iron surged by 34.8% compared to the same month last year, non-ferrous metals by 14.2%, and chemical raw materials by 11.7%.

The PPI directly affects the prices of Chinese exports. Since the PPI is expected to remain high for some time, the possibility of inflation being included in Chinese exports cannot be ruled out.

The National Bureau of Statistics said that despite international raw material prices remaining high in April, efforts to ensure supply and stabilize prices led to the PPI falling by 0.3 percentage points from 8.3% the previous month, and related authorities will firmly continue to implement price stabilization policies going forward.

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