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China July PPI Highest in 12 Years

August 11, 2008

China’s July producer price index rose 10 percent from year-ago levels because of higher prices for raw materials, fuel and power.

The jump in the July PPI, which measures ex-factory prices of finished products, was the highest in 12 years, the National Bureau of Statistics said Monday. The PPI has risen 8 percent in the first seven months of this year.

The report sent stock prices sharply lower on Chinese stock markets.

The purchase prices for raw materials, fuel and power rose 15.4 percent in July, from the same month of last year, Xinhua reported.

“In the wake of its economic development and the urbanization drive, China has not only expanded the production, but also increased imports of resources products,” said Zhang Liqun with the State Council Development and Research Center.

He said imports accounted for 50 percent of China’s total crude oil consumption, while iron ore imports more than 50 percent of consumption, the report said.

The PPI is an indicator of the consumer price index, a key measure of inflation, which will be released Tuesday.

The Chinese government, battling on several fronts to keep its economy on track, is trying to bring down inflation, currently more than 8 percent against a target of 4.8 percent this year.




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