Beijing, March 9 (BNA): China’s factory inflation eased in February to the slowest annual pace in eight months, but analysts expect a rebound in the coming months from rising global commodity prices including oil, challenging policymaking to support. Economy.
The National Bureau of Statistics, in a statement on Wednesday, said the producer price index rose 8.8% year-on-year, slowing from 9.1% growth in January, but slightly higher than the 8.7% increase in a Reuters poll. .
Several Chinese factories closed in the first half of February due to the Lunar New Year celebrations, which imposed temporary restrictions on the demand for raw materials.
On a monthly basis, the Producer Price Index turned into gains from a decline in January, with international crude oil prices rising sharply and pushing prices higher in domestic oil-related industries, according to a separate statement by the National Bureau of Statistics. Domestic prices of non-ferrous metals also rose.
“We expect year-on-year producer price inflation to remain elevated in the near term, with oil and metal prices rising sequentially due to geopolitical tensions,” Goldman Sachs analysts wrote in a note.
On Monday, an official with the government’s economic planner also said that China’s efforts to stabilize commodity prices faced new challenges in part due to geopolitical conflicts.
China imports more than 70% of its oil and 40% of its gas from abroad even as the government races to increase domestic production.
China is targeting slower economic growth of about 5.5% in 2022 than last year, with the government citing headwinds at home and abroad.
China’s central bank in December lowered the reserve requirement ratio for commercial lenders, or the amount of cash banks must hold in reserve, by 50 basis points, saving 1.2 trillion yuan ($190 billion) in long-term liquidity.
Some analysts said the scope of the monetary easing may now be limited due to the threat of higher commodity prices.
The central bank said on Tuesday that it will pay out more than 1 trillion yuan in profits to the central government this year, in a bid to help support fiscal spending.
The People’s Bank of China (PBOC) said profits have come from its foreign exchange reserve operations in recent years.
“Transferring the profits of the People’s Bank of China is the best way to reduce the money supply in my opinion,” said Tian Yuan, former deputy director of the Beijing Association for Economic Operations.
“The focus of the People’s Bank of China this year will be on adjustments to the asset-liability structure to maintain a relatively loose monetary policy.”
According to ANZ research, shifting PBOC profits is equivalent to increasing liquidity from reducing the required reserve ratio by more than 50 basis points.
The data showed that China’s consumer price index rose 0.9% in February, unchanged from January’s growth and market expectations.
The Chinese government left its CPI target for 2022, unveiled on Saturday, at around 3%, unchanged from 2021. Last year, the CPI rose only 0.9%, with cautious consumer spending reining in.
MI