China’s factory gate prices, which are a measure that shows what wholesalers pay for their products by manufacturers, grew at its fastest pace ever recorded last month.
As Chinese businesses face increasing power costs and rising commodity prices, the soaring cost of goods is a result.
China is the biggest exporter of goods in the world. Therefore, price rises can have a negative impact on other countries.
Globally, firms are struggling with supply issues after the pandemic.
China has experienced major power outages. This is due to a rise in industry demand, high energy prices, and the country’s transition to cleaner energy.
Official statistics showed that September’s producer price index (PPI), a measure of the pace at which prices rise over a year, rose by 10.7%. This is the highest rate of growth in the last 15 years since records started in 1995.
However, there are currently no evidence to suggest that higher prices are passed onto Chinese consumers.
China’s Consumer Price Index, also released on Thursday, increased by 0.7% in September. This was a slight increase over the previous month, but still below many economists’ predictions.
This could change as businesses and manufacturers are affected by higher electricity prices.
Because of fluctuating prices, there may also be a decrease in demand among consumers for certain items like household goods and clothing.
Watch out for indicators that the cost of goods in China may increase in other countries, as this could lead to higher inflation in those who import their products.
Inflation has risen in the US and UK as economies recover from the pandemic.
It is now expected that central banks might be forced to increase borrowing costs and reverse any emergency measures taken to lessen the effect of lockdowns.
In an effort to ease inflationary pressures and cool down their economies, some countries such as South Korea, New Zealand and Norway have raised their interest rates over the past week.
Power cuts in many sectors have caused disruptions, including those that use large amounts of energy such as cement production or steel smelting.
As utility companies are struggling to generate enough electricity, the price of many Chinese power plants’ coal has reached record levels.
Beijing is taking steps to reduce the power shortage, such as calling for coal miners’ output to be increased and managing electricity usage by large factories.