Feb 11, 2021 - Economy & Business

China's producer prices jump while consumer prices fall

Data: Investing.com; Chart: Axios Visuals
Data: Investing.com; Chart: Axios Visuals

Prices for Chinese consumers in January declined by 0.3% from last year, while prices for producers, or businesses, rose by 0.3%, data showed.

Why it matters: Rising prices for producers in China, the world's No. 1 trading nation, are often the result of increasing commodity costs and typically mean prices will rise for the rest of the world.

  • A decline in prices for consumers suggests the country's economic rebound from the coronavirus pandemic isn't materializing as strongly as hoped.

Details: PPI rose to its highest level since May 2019, while CPI fell to its lowest since November (however, November was the lowest reading since 2009).

In short: China's recovery has been uneven with its industrial and manufacturing sector outpacing consumer spending.

What they're saying: "PPI inflation continues the upward trend, suggesting that the manufacturing sector still outperforms," Hao Zhou, senior emerging markets economist at Commerzbank, told Bloomberg.

  • Consumer inflation momentum hasn’t been as strong as expected, and "this split between consumption and manufacturing is likely to persist in the foreseeable future."
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