China's producer prices rise 5%, fastest increase in over four years

Safir Arjan: China's producer price inflation hits 5%, fastest rise in over four years

At a glance, China's producer price index increased by 5% in September compared to the previous year; Biggest rise from ECB President Lagarde: ECB can't wait to fully see inflation secondary effects Lagarde at a Glance: Eurozone inflation driven mainly, but not exclusively, by rising energy prices. Lagarde says AMD or Applied Materials; Which stock is more attractive to invest in artificial intelligence? The boom in artificial intelligence has created great opportunities for the semiconductor industry; But all the companies in this chain grew from a path of American dividends as concerns about the aggressive increase in the Federal Reserve's interest rates decreased. American stocks returned from the daily bottom after the concerns about the aggressive increase in the Federal Reserve's interest rates decreased and the trend continued. Morgan Stanley increased the Brent oil price forecast to $105 per barrel. The big test of leadership after the founders at a glance ESMAL became an unrivaled player in the manufacture of the most advanced chips with a long-term investment in UV lithography. Get informed about the news by subscribing to the YouTube and Times newsletter.

Rising oil and commodity costs pushed China's producer inflation to its highest level in more than four years in September; However, the increase in prices has not yet been noticeably passed on to consumers. Weak domestic demand has limited companies' ability to raise product prices.

China's producer price index increased by 5% in September compared to the previous year; While the growth of this index was 3.8% in August, and forecasts indicated a 4.5% increase. This is the fastest growth since June 2022. Producer prices also increased by 1.2% on a monthly basis; Compared to a 0.4 percent increase in August.

Economists attributed a significant part of this pressure to disruptions in the supply of basic goods, related to the Middle East conflict. The costs of processing fuel, chemicals and non-ferrous metals increased significantly. Disruption in transportation, adverse weather conditions and geopolitical tensions also fueled the rise in costs.

In contrast, the consumer price index increased by 0.9 percent in September compared to the previous year; Slightly higher than the 0.8 percent growth in August, but less than the 1 percent forecast. This index grew by 0.2% on a monthly basis; while it was expected to increase by 0.3 percent. The monthly growth of consumer prices in August was 0.4 percent.

Gasoline prices increased by nearly 17% compared to the previous year, and according to the National Bureau of Statistics of China, added almost half a percentage point to the overall inflation. However, core inflation – which excludes food and energy prices – remained flat at 1 percent; A sign of the continued caution of households in spending.

These data indicate the uneven improvement of China's economy; An economy that relies more on exports than domestic consumption, and the confidence of the private sector, despite a series of support measures, remains fragile. The increase in the distance between producer and consumer prices also shows that producers are facing higher input costs, but due to the limitation of pricing power, they cannot easily transfer it to consumers.

This situation could put pressure on manufacturers' profit margins, while turning soaring factory costs in China into a source of upward pressure on global commodity prices. Rising oil and energy prices could also add to concerns among central banks, including the U.S. Federal Reserve and the European Central Bank, about energy-driven inflation.

Economists say that the main question is whether the increase in industrial activity will ultimately lead to the growth of employment and incomes and the strengthening of consumer confidence or not; Factors that can help reduce this gap and make the economic recovery process more balanced in 2027. Some also expect producer prices to drop again next year as price pressure for basic goods eases.

Beijing has stepped up its support, agreeing to set aside 550 billion yuan -- about $82 billion -- of unused local government bond quota for infrastructure and other spending. This action is placed next to measures such as mortgage subsidies. Low core inflation could still leave room for more support for the economy, but a jump in producer inflation makes it more difficult to decide whether to cut support policies more aggressively.

Chinese markets fell slightly after the release of the data; A limited reaction that showed that investors do not expect an immediate change in support policies.