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Lower costs ease Shanghai PPI growth in May
By Wang Yanlin |
June 20, 2011, Monday
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Online Edition
Online Edition
SHANGHAI'S producer prices grew slower in May thanks to lower oil and steel prices. It gave a glimmer of hope for the city to rein in inflation which hit a three-year high last month.
Producer Price Index, a factory-gate gauge of inflation, expanded 3.1 percent from a year earlier in May, the Shanghai Statistics Bureau said today. It moderated from the pace of 3.3 percent in April and 3.2 percent in March.
The bureau said in an analysis report that the easing growth rate was a result of declining costs of crude oil, lubricant and liquefied gas on the global market. Also, local steel producers cut the prices of some products last month.
"The latest producer prices may give policymakers some confidence in curbing consumer prices," said Li Maoyu, an analyst at the Changjiang Securities Co. "But such a trend of easing producer prices may not last long, as it heavily relies on the external prices that are beyond the city's control."
Shanghai government has been beefing up its fight against inflation, but its efforts have been offset by rising food costs as central China suffered severe drought, then floods.
Last month, Shanghai's Consumer Price Index, the main gauge of inflation, surged 5.3 percent from a year earlier, hitting a three-year high, but it was less than the national rate of 5.5 percent, a 34-month record.
To demonstrate a stiff tightening stance, the central bank raised the reserve requirement ratio again last week, hours after the release of China's consumer prices.
"With less price pressure on manufacturers, it is expected that smaller price jumps will be passed on to consumers," said Xu Weihong, an analyst at the Guodu Securities Co.
China's Producer Price Index rose 6.8 percent from a year earlier in May, keeping at the same level as that in April.
Producer Price Index, a factory-gate gauge of inflation, expanded 3.1 percent from a year earlier in May, the Shanghai Statistics Bureau said today. It moderated from the pace of 3.3 percent in April and 3.2 percent in March.
The bureau said in an analysis report that the easing growth rate was a result of declining costs of crude oil, lubricant and liquefied gas on the global market. Also, local steel producers cut the prices of some products last month.
"The latest producer prices may give policymakers some confidence in curbing consumer prices," said Li Maoyu, an analyst at the Changjiang Securities Co. "But such a trend of easing producer prices may not last long, as it heavily relies on the external prices that are beyond the city's control."
Shanghai government has been beefing up its fight against inflation, but its efforts have been offset by rising food costs as central China suffered severe drought, then floods.
Last month, Shanghai's Consumer Price Index, the main gauge of inflation, surged 5.3 percent from a year earlier, hitting a three-year high, but it was less than the national rate of 5.5 percent, a 34-month record.
To demonstrate a stiff tightening stance, the central bank raised the reserve requirement ratio again last week, hours after the release of China's consumer prices.
"With less price pressure on manufacturers, it is expected that smaller price jumps will be passed on to consumers," said Xu Weihong, an analyst at the Guodu Securities Co.
China's Producer Price Index rose 6.8 percent from a year earlier in May, keeping at the same level as that in April.
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