Chinese factories worried about profits face a record gap between rising production costs and selling prices

SourceCNBC
SectorFinancial Markets
CountryMiddle east

BEIJING — Chinese factories are facing the largest gap on record between the speed at which producer prices and consumer prices are climbing. Selling prices to private consumers are holding fairly steady, while production costs are soaring. That China’s from a year ago — the fastest since 2008 — as commodity prices surged, while the consumer price index climbed 1.3%, the National Bureau of Statistics said Wednesday.

The difference between the two reached 7.7 percentage points, the highest on record, surpassing the previous peak of 7 percentage points in 2017. The widening gap affects heavy commodity users the most, Larry Hu, chief China economist at Macquarie, said in a report Wednesday. He noted that manufacturers of cars, ships and airplanes are seeing earnings losses. On the other hand, coal miners and steel producers are benefiting from the commodity price surge, the report showed. Hu expects the gap between the producer and consumer price indexes to narrow as commodity prices pull...read more...