BEIJING: Accelerated consumer and industrial prices growth indicates nascent inflationary pressure on the Chinese economy, despite the good start to 2017. The consumer price index rose 2.5% year on year last month, fractionally above market expectations of 2.4% and the strongest in two and a half years. Meanwhile, industrial inflation expanded even faster, with the producer price index, which measures costs of goods at the factory gate, hitting an over-five-year high of 6.9%, Xinhua reported.
From condiments to rentals, prices have increased in almost every subdivision of consumer goods and services, leading to concerns that China will likely see soaring prices after successfully taming inflation over the past years. “Rising inflationary pressures have become a problem that cannot be ignored, which, some analysts caution, may lead to stagnation,” said Yin Zhongqing, deputy director of the Financial and Economic Affairs Committee of the National People’s Congress, the top legislature. The pressures, caused by excess liquidity, had been subdued by lackluster industrial prices for years, but an unexpectedly strong commodity-driven payment protection insurance rebound since the end of 2016 changed this, according to Yin.
