Industrial inflation in China reached its highest level in 26 years in October

The inflation of industrial costs in China reached its highest level in 26 years in October, driven by new outbreaks of Covid-19 and rising food and energy prices, according to official figures released Wednesday.

The producer price index (PPI) has risen for four consecutive months, pressuring the authorities to take action to control the rise, as they struggle to boost the recovery of the world’s second largest economy.

The PPI, which measures the cost of goods leaving the factory, grew 13.5% year-on-year to October, according to the National Statistics Office (ONE).

The increase in PPI was due to the combination of imported external factors and local shortages of energy and raw materials, “said ONE chief statistician Dong Lijuan.

That includes a strong increase in local coal prices, the rise in the global cost of oil and gas, and supply chain disruptions, explained Rajiv Biswas of IHS Markit.

Another recent factor, he added, was the increase in shipping costs around the world “due to the strong rebound in trade flows” between China, the United States and Europe.

The PPI rose 10.7% in September, which was the highest level recorded by the ONE since the mid-1990s.

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