China's producer price index (PPI) slowed in May on declining
oil prices, while living materials, a major constituent of PPI,
expanded faster than the month before due to soaring food
prices.
According to figures released yesterday by the National Bureau
of Statistics (NBS), the factory-gate price rose 2.8 percent
year-on-year in May after gaining 2.9 percent in April.
"The slowdown of the growth rate is mainly caused by the
adjustment of oil prices," said Chen Jijun, a macroeconomic analyst
from CITIC Securities. The producer prices of crude oil dropped by
3.9 percent in May.
Meanwhile, living materials - including foods, dresses and
ordinary goods as well as durable goods - expanded 2.4 percent in
May from a year earlier after gaining 2.1 percent in April. Among
them, the produce price of foods jumped 6.3 percent in May from a
year earlier.
"The pickup in its growth rate largely stems from soaring prices
of foods and indicates a higher consumer price index in May," Chen
said, adding that living materials will heavily impact the consumer
price index.
The consumer price index (CPI) is scheduled to be announced
today by the NBS. It's expected that the CPI in May jumped more
than 3 percent. If so, it would make China's CPI grow faster than
its PPI for four consecutive months.
Starting from this January, China's CPI has begun to grow faster
than its PPI, which captures price movements prior to the retail
level, despite the latter having long grown at a faster pace than
the former.
"Weak domestic consuming power is the main reason for the slow
CPI growth in the past four years despite robust economic expansion
in the meantime," said Li Wenpu, an economist from Xiamen
University.
If core CPI excluding foods and energy catches up with or
overtakes PPI, it may indicate a great shift of economic
development, Li said.
(China Daily June 12, 2007)