Producer price inflation remained negative in China last month for the fifth month in a row but the country’s China’s consumer inflation accelerated further in November to its highest level in nearly eight years, thanks to soaring prices of pork and other food items.
The producer price reading is a far more watched indicator of pressures in China’s still important manufacturing centre and a negative reading indicates downward pressure on companies and the price of their products from weak consumer or demand from other businesses.
China’s National Statistics Bureau said on Tuesday that the producer price index (PPI) trimmed its on-year drop to 1.4% in November, compared with a 1.6% fall in October. Economists had forecast a 1.5% fall.
Month on month, producer prices fell 0.1% in November from October, when it edged up 0.1% from the preceding month.
The PPI reading suggests that contrary to the move back to expansion in the two surveys of Chinese manufacturing in November, that wasn’t followed by an easing in downward pressure on factory gate prices. If anything the pressures remain even though the prices of many commodities eased in the month.
Meanwhile, China’s Consumer Price Index jumped by an annual 4.54% in November – the first time it had hit this annual rate since January 2012, according to the National Bureau of Statistics on Tuesday.
The key inflation reading was higher than a 3.8% rise in October and topped a forecast of a 4.4% increase from economists. But the month on month rate slowed in November, suggesting the worst of the surge might be over.
Food prices in November grew 19.1% from a year earlier, the fastest pace in more than 11 years, after climbing 15.5% in October.
That was no thanks to the price of pork which surged at an annual rate of 110.2% on year in November, breaking the record made in October as an outbreak of African swine fever continues to devastate China’s pig herd and driving the price of meat higher.
The statistics bureau said estimated that pork prices alone lifted headline CPI by 2.64 percentage points in November.
But there was a small ray of good news – the increase in pork prices on a month on month basis eased to 3.8% in November, down 16.3 percentage points from a month earlier.
Prices for other meat consumed as pork alternatives rose between 11.8% to 25.7% on year in November, the statistics bureau said (China has boosted imports of chicken, pork, veal, lamb and beef from across the world – especially Australia and NZ in recent months to try and put a lid on rising prices and maintain supplies).
Non-food prices climbed 1.0% from a year earlier after a 0.9% increase in October.
On a month-to-month basis, the index rose CPI 0.4% in November from October when the index rose 0.9%.
In the first 11 months of this year, China’s consumer inflation was up an annual 2.8%, edging closer to the government’s ceiling of about 3% for 2019.