China’s Factory Prices Rose More Slowly Than Anticipated in December

Source: National Bureau of Statistics of China

China’s factory-gate prices increased at a slower pace than initially anticipated in December after government measures to control high prices of raw materials. CSI 300 up +1.00%, CNY USD up +0.15%

• Consumer price inflation also eased last month as food prices dropped.
• The producer price index (PPI) rose 10.3% from a year earlier. Estimates from a Reuters poll had expected the PPI index to jump 11.1% after posting a 12.9% increase in November.
• Factory inflation has flattened in recent months from a 26-year high in October as Beijing intervened to manage high raw material prices and cool down an energy power shortage.
• Sheana Yue, a China economist at Capital Economics, stated that factory gate inflation is likely to continue dropping further over the coming months.
• Yue further stated that with coal supply improving and slowed property construction, there is a further downward movement to the price of industrial energy and metals.
• China’s consumer price index (CPI) expanded 1.5% year-on-year in December. 
• Food prices dropped 1.2$ year on year, with Yue signaling a recovery in the supply of pork and vegetables.