Last month, China’s “factory gate” prices increased at the highest rate on record, a gauge of what manufacturers charge wholesalers for items.
The rising cost of goods comes as Chinese businesses struggle with power outages and rising commodity prices.
Because China is the world’s largest exporter, price increases there might have an impact on other countries.
As economies recover from the epidemic, businesses throughout the world are dealing with supply difficulties.
Major power shortages in China have halted production at factories that supply worldwide brands like Apple, due to an increase in demand from industry, high energy prices, and the country’s move to greener energy sources.
The producer pricing index (PPI) climbed 10.7% from a year ago in September, the highest rate of inflation since records began in 1995, according to official statistics.
However, there is no indication that these additional prices are being passed on to Chinese consumers at the moment.
China’s consumer price index increased 0.7 percent year over year in September, edging higher from the previous month but falling short of most experts’ expectations.
However, if manufacturers’ earnings are squeezed and companies are faced with increased power bills, this might alter in the coming months.
Due to changing costs, customer demand for products such as household goods, clothes, and food may have diminished as well.
The cost of goods in China is being closely monitored for signals that prices in other areas of the world are rising, which might drive up inflation in nations that import Chinese goods.
Inflation has risen in recent months in countries such as the United Kingdom and the United States as their economies recover from the pandemic.
As a result, there are rising concerns that central banks will be compelled to raise borrowing costs and rescind emergency measures designed to mitigate the impact of lockdowns.
In recent weeks, some nations, including as New Zealand, South Korea, and Norway, have raised interest rates in an effort to cool their economy and reduce inflationary pressures.
Many sectors in the country have been affected by the power outages, particularly those that require a lot of energy, such as cement manufacturing, steel production, and aluminum smelting.
As utility companies struggle to create enough energy to meet demand, the price of coal used in many of China’s power plants has hit a series of new highs in recent days.
Beijing has taken efforts to alleviate the power shortage, including encouraging coal miners to increase output and regulating how much electricity major companies consume.