CHINA’S producer prices rose the fastest in more than five years in November as prices of coal, steel and other building materials climbed, boosting industrial profits and giving firms more cash flow to pay off mountains of debt.

    The producer price index (PPI) rose 3.3 percent last month from a year earlier, a pace not seen since late 2011 and well above expectations, the National Bureau of Statistics (NBS) said Friday.

    On a monthly basis, producer prices rose 2.1 percent.

    China’s consumer inflation rate also quickened to 2.3 percent year on year, the highest since April, due to higher food prices.

    Analysts polled by Reuters had expected a gain in producer prices of 2.2 percent, up from 1.2 percent in October, while consumer prices had been expected to pick up marginally to 2.2 percent from 2.1 percent.

    A construction boom led by higher government spending and a blistering housing market rally have boosted prices for materials from steel and copper to glass and cement, with speculators adding fuel to a months-long rally in China’s commodity futures markets.

    Government efforts to reduce excess capacity in industrial and mining sectors have also buoyed prices by creating shortages in some areas, such as coal.

    Industrial profit growth picked up speed in October, rising 9.8 percent from a year earlier.

    But government officials and analysts have warned that the gains have been overly reliant on rising prices and may not confirm a sustained increase in real demand.

    November’s consumer inflation was again buoyed by a jump in food prices compared with same period last year, which rose 4 percent. Non-food prices inched up 1.8 percent versus October’s 1.7 percent.

    More upbeat producer and consumer inflation data reinforce views that the central bank will be in no rush to loosen monetary policy any time soon.

    (SD-Agencies)