China Feb producer inflation fastest in nearly 9 years as commodities surge

China Feb producer inflation fastest in nearly 9 years as commodities surge

International News

China’s producer price inflation accelerated to its fastest pace in nearly nine years in February and by more than expected as prices of steel and other raw materials extended a torrid rally, boosting profits for industrial companies worldwide. Consumer inflation, however, cooled more than expected to its slowest pace since January 2015, leaving some analysts puzzled about the strength of the broader economy. The producer price index (PPI) jumped 7.8 percent in February from a year earlier, compared with a 6.9 percent increase in January, the National Statistics Bureau (NSB) said on Thursday. Analysts had expected a 7.7 percent gain, a Reuters poll showed. Producer price inflation “was largely driven by proactive fiscal policies, market speculation and overcapacity reduction policies,” Zhou Hao from Commerzbank in Singapore wrote in a note, referring to a sharp increase in government infrastructure spending and a months-long rally in commodities futures markets. “We have yet to see any significant pass through effects from PPI inflation to CPI inflation, which means that China’s economy is not on a solid footing.”