China's commodity prices rise at fastest pace in a year in May

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China's commodity prices rise at fastest pace in a year in May

The global commodity prices of China and factory gates rose in May at their fastest annual pace in over 12 years due to the low base of comparison. Consumer prices increased for the third straight month but at a slower rate than expected.

The producer price index increased from a year earlier, said the National Bureau of Statistics in a statement, driven by significant price increases in crude oil, iron ore and non-ferrous metals. Analysts in a Reuters poll predicted the PPI to rise 8.5% in April after a 6.8% increase in April.

On a monthly basis, the PPI rose 1.6% to 0.9, up from the $10.5 rise in April.

Higher commodity prices and low bases last year could further increase Chinese producer price inflation in the second and third quarter, China's central bank has said.

The prices for commodities including coal, steel, iron ore and copper, which affect PPI, have increased this year, fuelled by recent global market returns in demand and plentiful liquidity post-lockdown.

China's policy makers have pledged to relax the red hot commodity prices and reduce them to consumers. There have yet to be major problems with China's consumer inflation for the soaring producer prices, which are still mild and well below the government's official target of 3%.

NBS data also showed China's consumer price index increased in monthly terms in May by 1.3%, the largest rise in eight months. That was still slower than analysts thought for a 1.6% rise after a 0.9% gain in April.

China's economy has seen a strong rebound from a coronavirus-induced slump early this year.

China's gross domestic product expanded in the first quarter in a record 18.3% and many economists expect growth to exceed 8% this year.

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