China's factory inflation accelerates to 3.8 per cent on energy costs

China's producer price index climbed 3.8 per cent year on year in August, outpacing the 3.6 per cent forecast by economists polled by financial data provider Wind and marking an acceleration from July's 3.5 per cent reading.

The National Bureau of Statistics released the data on Wednesday, showing factory-gate inflation rose alongside volatile energy and commodity costs linked to the US-Israel war on Iran. Consumer inflation also strengthened, with the consumer price index advancing 0.8 per cent year on year last month, rebounding after two months of slower growth and up from July's 0.5 per cent.

Energy and metals drive inflation

"Rising international prices for crude oil and non-ferrous metals drove up prices in related domestic sectors," said Dong Lijuan, a senior statistician at NBS. Coal mining prices surged 26.6 per cent year on year in August, while non-ferrous metal processing rose 20.8 per cent. Prices in the oil and gas extraction industry climbed 10.5 per cent.

The August CPI reading was broadly in line with Wind's projection of a 0.78 per cent rise. The acceleration in both producer and consumer prices comes as China grapples with weak domestic demand even as geopolitical tensions push up global energy costs.

Source: South China Morning Post