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China's producer price inflation slows to 13-month low

Reuters  |  BEIJING 

By Stella and Elias Glenn

(Reuters) - China's December prices grew at their slowest pace in 13 months as the government's stepped-up war against winter smog dented factory demand for raw materials.

The price index (PPI) rose 4.9 percent in December from a year earlier, compared with 5.8 percent in November, the (NBS) said on Wednesday.

Analysts polled by had expected the December price rate would sharply slow to 4.8 percent.

On a month-on-month basis, the rose 0.8 percent in December.

The data support the view that a slowdown in the world's second-biggest has started to take hold in the last few months.

This follows a crackdown on smog in the heavily industrialised northern provinces, which has hit demand for raw materials, and continued curbs on the housing market, which have weighed on property investment.

Raw material prices rose 8.1 percent in December year-on-year, compared with 9.7 percent in November, data from the statistics bureau showed.

China's industrial firms reported seven-month low earnings for November as demand and price gains eased, adding more pressure on companies saddled with debt.

However, production curbs at factories have triggered fears of supply shortages, giving a major boost to iron ore and steel futures prices, helping to offset tepid demand during winter months as construction activities slow.

last year also kicked off a sweeping campaign to switch millions of households and thousands of businesses from coal to in north China, part of long-running efforts to clean the region's notoriously thick smog, sparking an unprecedented rally in prices nationwide due to gas shortages.

China's consumer accelerated less than expected to 1.8 percent in December from 1.7 percent previously.

The consumer price index (CPI) had been expected to edge up to 1.9 percent on an annual basis.

Food price declined 0.4 percent in December after falling 1.1 percent in November.

Non-food price rose 2.4 percent from a year earlier in December, compared with 2.5 percent in November.

For 2017, rose 1.6 percent from the year before, well within Beijing's 2017 target of 3 percent, while surged 6.3 percent.

The world's second-biggest is expected to have clocked growth of 6.8 percent in 2017, up slightly from the previous year, supported by a construction boom and robust exports.

(Additional reporting by in Beijing; Editing by Sam Holmes)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, January 10 2018. 09:07 IST