China’s Factory Inflation Finally Slows Down From 26-Year High

China’s factory inflation slowed down slightly in November from a 26-year high, helped by a government policies on rising commodity prices and a moderate power crunch.



NBS senior statistician Dong Lijuan said in a statement accompanying the data release that the recent government policies to rein in sharply increasing energy and raw materials prices are taking effect. These include setting an immediate ex-mine price target and ordering rapid production to cool high prices, which has been effective in easing a power shortage expected this winter.


Factory inflation remained high, however. The producer price index (PPI) grew 12.9% year on year, higher than the 12.4% growth in forecasts prepared by Investing.com but lower than October's 13.5% growth.



According to Commerzbank senior EM economist Zhou Hao, PPI has likely peaked, the rate at which it will slow down is highly uncertain.


"Food aside, price pressures are generally easing, especially in heavy industry," Capital Economics senior China economist Julian Evans-Pritchard said in a note.

"As such, we don’t think inflation concerns will hold back the People’s Bank of China (PBOC) from further loosening measures including policy rate cuts."

©Photo: Lin Yunlong/Zhejiang Daily via REUTERS