China's factory-gate inflation rises 0.5 percent

China's producer prices surged at their quickest rate in over four years in September, as higher oil and commodity prices pushed up factory-gate costs, according to new data from the National Bureau of Statistics. The producer price index (PPI) climbed 5 percent year-on-year, up from 3.8 percent in August, marking the fastest pace since June 2022.

This surge in factory-gate inflation was largely driven by heightened commodity supply disruptions resulting from the Middle East conflict, with particular increases in fuel processing, chemicals, and non-ferrous metals. Nguyen Hoang Nam, a China economist at Capital Economics, noted that much of the upward pressure remained due to these supply issues.

Meanwhile, consumer inflation ticked up to 0.9 percent year-on-year, a slight increase from the 0.8 percent jump in August. Gasoline prices spiked 16.6 percent compared to a year ago, accounting for around 0.47 percentage points of the headline CPI growth. In response to these economic pressures, Beijing has increased support for the economy by approving an additional 550 billion yuan in unused local government bond quota for infrastructure and other spending, in addition to existing measures like mortgage subsidies.

Core inflation, which excludes volatile food and energy prices, rose 1 percent year-on-year, remaining unchanged from the previous month.