China’s factory inflation hits 26-year high as power crunch bites

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Image Credits: Wall Street Journal

China’s factory gate inflation hit a 26-year high in October as coal prices soared amid a power crunch in the country’s industrial heartland, further squeezing profit margins for producers and heightening stagflation concerns.

Consumer price rises also quickened, although at a slower pace than factory gate prices. The consumer price index (CPI) rose 1.5% in October year-on-year, compared with September’s 0.7% rise. Zhiwei Zhang, chief economist at Pinpoint Asset Management said, “We are concerned about the pass-through from producer prices to consumer prices.” He further added, consumer prices will likely speed up in coming months as firms faced depleted inventories.

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