China's factory gate prices hit over 12-year high as commodity costs rally

BEIJING - China's producer prices rose at a faster pace in May to the highest level since September 2008 as domestic demand steadily recovers and raw material prices continue to rally, official data showed Wednesday.

China's producer price index (PPI), which measures costs for goods at the factory gate, went up 9 percent year-on-year last month, accelerating from the 6.8-percent growth in April, according to the National Bureau of Statistics.

The carryover effect contributed 3 percentage points to the PPI growth, while new price increases contributed 6 percentage points.

On a monthly basis, the PPI gained 1.6 percent, quickening by 0.7 percentage points from April, data from the NBS showed.

China's factory prices returned to positive growth in January, the first time since the novel coronavirus outbreak, representing its fifth consecutive month of positive gains.

In May, the prices of international crude oil, iron ore and non-ferrous metals rose further, driving up the prices of industrial products in China, said Dong Lijuan, an NBS senior statistician.

The PPI for the country's domestic oil and natural gas extraction sector grew 1.7 percent month-on-month in May, up by 1.3 percentage points from the growth in April.

Furthermore, as factories started to add reserves of steam coal to meet the summer power peak, the demand for such products surged, pushing up the PPI of the coal mining and washing industries to jump 10.6 percent month-on-month during the period.

In the first five months, the PPI growth averaged 4.4 percent year-on-year, according to the NBS.

The PPI data came along with the release of the consumer price index, a main gauge of inflation, which gained 1.3 percent year-on-year in May.