PPI growth slows, bringing hope inflation will follow suit
By Wang Yanlin |
June 21, 2011, Tuesday
|
Print Edition
Print Edition
SHANGHAI'S producer prices increased at a slower pace in May thanks to lower oil prices and less expensive steel products. It sent a glimmer of hope that the city will be able to control inflation, which hit a three-year high last month.
The Producer Price Index, a factory-gate gauge of inflation, expanded 3.1 percent from a year earlier in May, the Shanghai Statistics Bureau said yesterday. It slowed from the 3.3 percent pace in April and 3.2 percent in March.
The bureau said the easing growth rate was a result of declining costs of crude oil, lubricant and liquefied gas on the global market. Also, domestic steel producers lowered prices of some products last month.
"The latest producer prices may give policy makers some confidence in curbing consumer prices," said Li Maoyu, an analyst at Changjiang Securities Co. "But the trend may not last long since it largely depends on external prices, which the city can't control."
The Shanghai government has beefed up its inflation fight, but its efforts have been countered by rising food costs after severe droughts and floods this spring and summer have destroyed crops across the country.
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 and picking up further from April's 5.1 percent. It was less than the national rate of 5.5 percent in May.
In response, the central bank raised the reserve requirement ratio - which took effect yesterday - again last week.
"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 Guodu Securities Co.
China's Producer Price Index rose 6.8 percent from a year earlier in May, the same as in April.
The Producer Price Index, a factory-gate gauge of inflation, expanded 3.1 percent from a year earlier in May, the Shanghai Statistics Bureau said yesterday. It slowed from the 3.3 percent pace in April and 3.2 percent in March.
The bureau said the easing growth rate was a result of declining costs of crude oil, lubricant and liquefied gas on the global market. Also, domestic steel producers lowered prices of some products last month.
"The latest producer prices may give policy makers some confidence in curbing consumer prices," said Li Maoyu, an analyst at Changjiang Securities Co. "But the trend may not last long since it largely depends on external prices, which the city can't control."
The Shanghai government has beefed up its inflation fight, but its efforts have been countered by rising food costs after severe droughts and floods this spring and summer have destroyed crops across the country.
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 and picking up further from April's 5.1 percent. It was less than the national rate of 5.5 percent in May.
In response, the central bank raised the reserve requirement ratio - which took effect yesterday - again last week.
"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 Guodu Securities Co.
China's Producer Price Index rose 6.8 percent from a year earlier in May, the same as in April.
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