Increasing raw materials prices lead China’s factory-gate inflation to hit a 13-year high

Due to recent domestic COVID-19 outbreaks, China has started to lose its grip due to an increase in raw material prices, compressed property curbs, and a campaign to reduce carbon emissions.

In August, China’s factory-gate inflation hit a 13-year high by massive raw materials prices despite Beijing’s attempts to cool them which is putting more pressure on manufactures in the world’s second economy.

From a year earlier in August, the producer price index increase by 9.5 percent. On Thursday the National Bureau of Statistics (NBS) said, the fastest pace since August 2008, was when the 9.0 percent rise tipped in a Reuters poll and the 9.0 percent marked in July.

From the impact of last year’s coronavirus, china has made its economy strongly well again but due to recent domestic COVID-19 outbreaks, China has started to lose its grip due to an increase in raw material prices, compressed property curbs, and a campaign to reduce carbon emissions.

In the recent month, the Commodity prices have been pulled apart, weakening the bottom lines of many mid-and downstream factories. On Tuesday China’s coal prices record high oversupply concerns as fresh rounds of safety checks started by major coal regions.

Julian Evans-Pritchard, the senior China economist at Capital Economics, writes in a note, “China’s industrial firms have marked a slow earning from the straight five months, But coal and metals prices will likely drop back as construction activity falls amid restrictions on the property sector and slowing credit growth.” And the overall inflation will also be pulled over by the higher comparison base towards the end of last year. “We doubt producer price inflation will rise much further,” Julian Evans-Pritchard added.

Earlier this year from August, Prices in the coal mining and washing sector increased by 57.1 percent. Whereas the consumer price index in August marked a high of 0.8 percent compared with a 1.0% gain in a Reuters poll and below the government target of around 3% this year, showed a separate NBS statement.

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