(Bloomberg) -- China’s factory-gate prices surged more than expected in April, supported by gains in commodity prices and a low base of comparison from last year, while consumer inflation remained relatively subdued.
The producer price index rose 6.8% from a year earlier, the highest since October 2017, following a 4.4% gain in March, the National Bureau of Statistics said Tuesday. The median forecast was for a 6.5% increase. Consumer prices increased 0.9% on year, slightly below the 1% gain projected by economists.
The commodities boom, fueled by rising global demand and supply shortages, has stoked concerns about inflation around the world. As the world’s biggest exporter, rising PPI in China is another risk to global inflation as manufacturers start passing on higher prices to retailers.
Central bankers from the U.S. Federal Reserve on down maintain that price gains are temporary. In China, policy makers insist the impact of commodity prices on the domestic economy will be limited and that price growth remains generally under control. Still, officials have pledged to strengthen controls on the raw materials market to limit costs to companies.
Click here for a breakdown of China’s April producer prices
Consumer inflation remained relatively amid lower pork prices, a key element in the country’s CPI basket.
The People’s Bank of China is seeking to scale back the stimulus it pumped into the economy during the pandemic last year, worried by the build up of debt. Economists expect policy makers to slow the pace of credit expansion rather than raise interest rates. The Communist Party’s Politburo, the top decision-making body, said last month there won’t be any sharp reversal of macroeconomic policies.
China aims to keep its consumer inflation at around 3% this year, but an NBS official said in a recent interview that the headline index is expected to be “significantly lower” than the official target in 2021.
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