China’s factory gate inflation slowed in November, driven by government curbs on commodity prices and an easing power crunch, amid Beijing’s efforts to bolster a faltering economy.
The increase in the producer price index was slower than a 13.5% gain in October but faster than the 12.4% rise expected in a Reuters poll of analysts.
China’s economy, which staged an impressive rebound from last year’s pandemic slump, has lost momentum in recent months as it grapples with surging prices, a slowing manufacturing sector, debt problems in the property market and persistent Covid-19 outbreaks.
The People’s Bank of China on Monday announced a cut to the amount of cash that banks must hold in reserve, its second such move this year, to bolster slowing growth.
Factory-gate inflation has sped up since May this year due to soaring commodity prices, piling pressures on downstream businesses to pass on their costs to consumers.
Authorities have rolled out a series of interventions in recent months, including setting an immediate ex-mine price target and ordering rapid production to cool red-hot prices, measures that have proven effective in easing a power shortage expected this winter.
The consumer price index rose 2.3% year-on-year, the National Bureau of Statistics said in a separate statement, slower than expectations for a 2.5% rise but picking up from 1.5% in October.
Consumer inflation remains modest as strict Covid-19 curbs impede consumption and weigh on demand, pointing to a limited pass-through from high factory gate prices.
No cases of the Omicron Covid-19 variant have been reported in China to date, but its emergence could add pressure to the strict zero-tolerance policy on coronavirus cases and increase logistical challenges for exporters, analysts say.
The world’s second-largest economy faces multiple headwinds heading into 2022 including the downturn of its property sector.
China’s top government think tank on Monday recommended authorities set an economic growth target of above 5% for next year and a consumer inflation target of 3%.
- Reuters with additional editing by Jim Pollard