China's PPI rose to another record high, while the CPI rose significantly after consumer panic over the potential shortage of food stocks ahead of winter.
On Wednesday (10/November), China's National Bureau of Statistics published data on Producer Inflation (PPI) which jumped from 10.7 percent to 13.5 percent on an annual basis in October.
This figure is higher than economists forecast for a 12.4 percent increase. China's producer inflation rate is currently at its highest on record since 1996.
The rapid increase in China's PPI in recent months is inseparable from the problem of rising commodity prices such as iron ore, copper, crude oil, and coal in the international market.
This makes producers have to spend more in the production process.
Responding to rising producer inflation that is getting out of control, the Chinese government is trying to take several actions, such as releasing fuel reserves to the domestic market.
In addition, China's central bank (PBoC) is projected to intervene to boost economic growth, which is likely to experience a slowdown in the fourth quarter of this year.
CPI Boosts Panic Buying
In a separate release, China's annual consumer inflation (CPI) data reportedly rose from 0.7 percent to 1.5 percent in October, beating expectations for a 1.4 percent increase.
This drastic increase was triggered by public concerns about food shortages in the domestic market, thus prompting panic buying in several regions of China.
Last week, China's commerce ministry called for urgent action to stabilize prices including vegetables, meat and cooking oil in preparation for winter.
Recent reports say that the relevant authorities have quickly assured the public that food stocks are not running short.
So far, the effect of the PPI spike has not yet felt its impact on prices at the consumer level.
Although the increase in the CPI month was not caused by this factor, it is possible that the effect of the spike in the PPI will spread to consumers and improve the outlook for China's CPI in the coming months.
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