China's Producer Price Index, the yardstick of factory-gate inflation, grew at the slowest pace in more than two years in November, reflecting a moderating economy, the National Bureau of Statistics said today.
PPI growth slowed to 2 percent last month, retreating from an increase of 6.6 percent in October and recording the weakest growth since April 2006.
The sharp withdrawal was due to falling energy and commodities costs on the international market and declining production demand, analysts said.
"The abrupt slowdown in the PPI is a bit surprising. It indicates a sharp decline in short-term demand. But looking ahead, such big fluctuations usually indicate the bottom of economic adjustment. For China, it could occur in the first quarter of next year. And then we can expect demand to increase," said Li Maoyu, an analyst with Changjiang Securities Co.
Li predicted PPI growth would be between 5 and 6 percent in November. He predicted the CPI may expand at a pace below 3 percent from October's 4-percent advance.
The PPI grew 7.6 percent in the first eleven months from a year earlier. It was at a 12-year high of 10.1 percent in August.
Last month, the price of crude oil from Chinese factories dropped 14.7 percent on an annual basis, sliding from a 41.2-percent hike in July, when global oil prices were more than US$140 a barrel. International crude prices have slumped to below US$50 a barrel since then.
The costs of other raw materials also registered decreases. The prices of nonferrous metals were 19.4 percent lower than a year earlier and durable consumption goods were 0.5 percent lower.
(Shanghai Daily December 10, 2008)
