China’s producer price index crushes expectations

  • China September Consumer Price Index rose 1.6 percent, matching forecasts
  • The September Producer Price Index, however, crushed a forecast rise of 6.3 percent, instead coming in at a 6.9 percent increase on-year

China’s consumer price index rose 1.6 percent in September from a year ago, meeting expectations, data from the National Bureau of Statistics showed on Monday.

Meanwhile, the producer price index jumped 6.9 percent in September from a year ago, which topped expectations. This was spurred by a year-long drive in construction spending that includes government-led infrastructure investment.

According to a Reuters poll, China’s Consumer Price Index was forecast to rise 1.6 percent in September from a year ago. August CPI was 1.8 percent.

The Producer Price Index was predicted to have risen 6.3 percent in September from a year ago, steady from August, according to Reuters.

The strong PPI print that points to higher factory gate prices may help markets outside of China as the East Asian economy continues to grow, translating into demand for raw materials, said Tony Boyadjian, Compass Global Market’s senior vice president of foreign exchange.

“What this means is that we could see a little bit more of imported inflation pressure elsewhere,” Boyadjian told CNBC’s “Street Signs.”

China has been posting strong economic numbers this year ahead of a leadership meeting in the capital city of Beijing later in the week, which will usher in a reshuffle in the top ranks of the Communist Party.

According to a statement on the website of the People’s Bank of China citing central bank governor Zhou Xiaochuan, the world’s second-largest economy is likely to post growth of 7 percent in the second half of the year thanks to rapid household spending. First half GDP growth was 6.9 percent.

China will be posting third-quarter GDP figures on Thursday, just a day after the Communist Party Congress starts. Economists polled by Reuters expect 6.8 percent growth.

Source: CNBC