OPINION
Market Rating Before FOMC MeetingJan 31
Producer Inflation Declines For The First Time Since The Pandemic In China
Earlier today, National Bureau of Statistics of China (NBS) reported that the country's consumer price index (CPI) rose 0.1% in October compared to the previous month, and stood at 2.1% on an annual basis. In this period, the producer price index (PPI) decreased by 1.3% compared to the same month of the previous year.
According to NBS, the decline in mining by 6.7% and manufacturing by 3.5% was decisive in the biggest drop in producer inflation since November 2020. On the other hand, food and water supply at the level of 4.6% and textiles at the rate of 2.5% came to the fore.
In sub-items, the metals class was the main driver with a decrease of 12.3%, followed by building materials at 5.1%, non-metallic mineral products at 4.9%, and chemical products at 2.8%. Agricultural products with 11.3% and fuel with 7.30% had a limited upward effect.
The data show that the commodity market, calmed by the aggressive rate hikes by global central banks, plays an important role in reducing production costs in China. On the other hand, it is understood that the declining domestic demand for the housing sector forces intermediate goods producers to reduce prices.
In China, which has more than 25 percent of global manufacturing activities, the decrease in producer prices after 2 years reveals that the effects of supply bottlenecks and supply chain disruptions that emerged with the pandemic on global inflation are now extremely limited. This situation also alleviates the risk of importing inflation by the USA and EU countries.
According to NBS, the decline in mining by 6.7% and manufacturing by 3.5% was decisive in the biggest drop in producer inflation since November 2020. On the other hand, food and water supply at the level of 4.6% and textiles at the rate of 2.5% came to the fore.
In sub-items, the metals class was the main driver with a decrease of 12.3%, followed by building materials at 5.1%, non-metallic mineral products at 4.9%, and chemical products at 2.8%. Agricultural products with 11.3% and fuel with 7.30% had a limited upward effect.
The data show that the commodity market, calmed by the aggressive rate hikes by global central banks, plays an important role in reducing production costs in China. On the other hand, it is understood that the declining domestic demand for the housing sector forces intermediate goods producers to reduce prices.
In China, which has more than 25 percent of global manufacturing activities, the decrease in producer prices after 2 years reveals that the effects of supply bottlenecks and supply chain disruptions that emerged with the pandemic on global inflation are now extremely limited. This situation also alleviates the risk of importing inflation by the USA and EU countries.
