Beijing, China report on Wednesday showed that China’s factory-gate inflation slowed to its lowest level in eight months in February, thanks to tighter coronavirus controls and lower food prices.
Since June last year, the National Bureau of Statistics (NBS) has said that the producer price index (PPI), which shows how much it costs to make things at the factory gate, has risen 8.8% a year. This is the slowest rate since June when coal prices dropped.
It was higher than the 8.6 percent predicted by Bloomberg pollsters but lower than the 9.5 percent in January.
Dong Lijuan, a senior statistician at the National Bureau of Statistics, said that the rise in producer prices last month was caused by rising prices for things like crude oil and non-ferrous metals all over the world.
The consumer price index (CPI), a key measure of retail inflation, rose by 0.9 percent year on year in February, matching the level seen in January.
A steady drop in the cost of food, including a 42% drop in the price of the main meat pig over the last year, has helped to ease inflation fears.
According to a Capital Economics analyst, Russia’s military campaign in Ukraine is expected to slow down the global food supply. China imports barley, sunflower oil, and grain from Ukraine, which is why the price of these products could go up in China.
China’s leaders set a goal of 5.5 percent GDP growth this year, which is the lowest goal since 1991. They also warned that the Ukraine conflict could disrupt global supply lines.
Analysts say that lower inflation could make the People’s Bank of China provide policy help to keep the economy going.
Profitability is being squeezed by rising production costs and low consumer prices, according to Zhiwei Zhang, Chief Economist at Pinpoint Asset Management.
“If high commodity prices continue into the second quarter, the problem for Chinese businesses will grow,” he warned.