Global inflationary pressures are highlighted by the rise in factory prices in China in May at an annual rate of 9%, the fastest in more than 12 years. According to a statement from the country’s statistical office, the peak was the rise in prices of oil, iron ore and non-ferrous metals.
Investors are increasingly worried that measures to support economies could spur global inflation and force central banks to tighten their policies, thus limiting the recovery.
The increase in BTI has not yet been passed to China’s Consumer Price Index (CPI), so the country’s central bank is unlikely to be worried at this time. Consumer prices rose at the highest annual rate in eight months, but were well below the official 3% target. Statistics show that the CPI rose at an annual rate of 1.3% in May, up from 0.9% in April, lower than the 1.6% increase expected by economists polled by Reuters.
However, there are indications that Chinese factories, which are already operating at a narrow profit margin, are passing on the increased cost of raw materials and intermediates to their overseas customers, which could exacerbate the problem of global inflation.
“The concern is that BTI may be moving high for a long period of time, which would be a financial headache if companies in the next stages of production could not absorb the higher costs,” said the chief economist at Hwabao Trust.
“Producers’ price increases are likely to be close to their highest level… We do not expect consumer prices to rise well above 2% in the coming quarters. “So the data is unlikely to cause any change in monetary policy,” said a China economist at Capital Economics.
The Chinese data were announced, while the inflation data in the USA are expected tomorrow, with the investors fearing that if it moves again to high levels, the Fed will start thinking about the gradual reduction of the support measures.
Source: Zougla.gr by www.zougla.gr.
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