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May 21, 2010

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Producer prices remain high

SHANGHAI'S growth in producer prices remained at the same high level last month compared with March, and spending in property development was a major driver of rising investment in fixed assets.

The Producer Price Index, the factory-gate gauge of inflation and a harbinger of future consumer prices, rose 3.3 percent from a year earlier in April, the same as the month before, the Shanghai Statistics Bureau said yesterday.

The growth was bolstered by price jumps in non-ferrous metals, oil refining and the manufacturing of chemical products, the bureau said.

"Although the price increase seems mild in Shanghai compared with the national figure, the inflationary pressure is no less here in the city," said Yan Jun, an analyst with the bureau. "Since Shanghai has a big base, a small rise in the index points to a big cost increase."

The country's producer prices soared 6.8 percent on an annual basis last month, up 0.9 percentage point from March.

The PPI increase can hurt the growth of industrial production due to higher manufacturing costs, and it also heralds faster growth in consumer prices as higher costs will eventually be passed on to consumers.

Shanghai's Consumer Price Index, a main gauge of inflation, rose 2.6 percent on year in April, up 0.5 percentage point from March. The city's industrial production advanced 26.2 percent in April, 2 percentage points less than in March.

Meanwhile, the bureau said in an analysis report yesterday that real estate investment, which surged 31.4 percent from a year earlier in the first four months, has become a major driver of total fixed-asset investment, which grew 11 percent through April.

Investment in property development jumped to 55.1 billion yuan (US$8.1 billion) in the city during the January-April period, while total fixed-asset investment totaled 139.3 billion yuan.

Compared with soaring real estate investment, spending in manufacturing dropped 7.3 percent from a year earlier through April.




 

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