China’s National Bureau of Statistics announced on Friday that the consumer price index (CPI) rose 0.4% year-on-year in March, while the industrial producer ex-factory price index (PPI) rose 4.4% year-on-year and hit its highest value since July 2018.
Both indicators rose more than expected, and raw materials for various industries in China, including copper metal, stainless steel, etc., have also risen significantly since early April, causing widespread concern in the market. The market has felt the difficulties caused by the commodity price hikes to the real economy, and some companies have even stopped production because of the rapid upstream price hikes.
China’s State Council Finance Committee held a meeting last week and proposed to keep prices stable, especially focusing on the trend of commodity prices, which further raised concerns about prices.
According to Reuters, some people pointed out on this basis that the central bank may accelerate the pace of monetary tightening. However, some insiders analyzed that PPI is not an important reference factor for the central bank’s monetary decisions, and core CPI is still at a low level, so it is not appropriate to over-interpret the meeting of the Finance Committee.
Another industry insiders pointed out that the price increase of production materials is forming a diffusion effect, the next link needs to pay attention to the general daily necessities of the overall price increase.
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