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China inflation
EconomyEconomic Indicators

China inflation: Ukraine invasion impact starting to show despite factory-gate price growth cooling

  • China’s official consumer price index (CPI) rose by 0.9 per cent in February from a year earlier, unchanged from January
  • China’s producer price index (PPI) rose by 8.8 per cent in February, down from a rise of 9.1 per cent in January

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China’s official consumer price index (CPI) rose by 0.9 per cent in February from a year earlier, unchanged from January. Photo: Xinhua
Andrew MullenandLuna Sun

China’s headline factory-gate inflation rose at the slowest pace in eight months, according to data released on Wednesday, but rising commodity prices in response to the war in Ukraine have started to filter through.

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The official producer price index (PPI), which reflects the prices that factories charge wholesalers for products, rose by 8.8 per cent in February from a year earlier, down from a rise of 9.1 per cent growth in January.
This was above expectations of analysts surveyed by Bloomberg, who had predicted a fall to 8.6 per cent growth, and was the slowest annual growth since June, when CPI also rose by 8.8 per cent.

But senior National Bureau of Statistics statistician Dong Lijuan confirmed a month-on-month increase as the PPI was “affected by the increased commodity prices globally such as crude oil and non-ferrous metals”.

“Producer price inflation declined … But this was due to base effects. In month-on-month terms, prices rose 0.5 per cent, the most since last October. The main drivers were higher prices of oil, gas and iron ore,” Julian Evans-Pritchard, senior China economist at Capital Economics.

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“Inflation will pick up further in the near-term. The surge in global commodity prices following Russia’s invasion of Ukraine will have a much more pronounced impact on the March figures.”

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