CHINA’S factory gate inflation hit a 13-year high in August driven by roaring raw materials prices despite the government’s attempts to cool them, putting more pressure on manufacturers in the world’s second-largest economy.

The producer price index (PPI) rose 9.5 percent from a year earlier in August, the National Bureau of Statistics (NBS) said Thursday, faster than the 9 percent increase tipped in a poll and the 9 percent reported in July. That was the fastest pace since August 2008.

China’s economy has recovered strongly from last year’s coronavirus slump but has been losing steam recently due to domestic COVID-19 outbreaks, high raw material prices, tighter property curbs and a campaign to reduce carbon emissions.

Commodity prices have been on a tear in recent months, hurting the bottom lines of many mid and downstream factories. China’s coal prices soared to a record high Tuesday over supply concerns as major coal regions started fresh rounds of safety checks.

Earnings at China’s industrial firms have slowed for five straight months.

But coal and metals prices will likely drop back as construction activity falls amid restrictions on the property sector and slowing credit growth, Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note.

And the higher comparison base towards the end of last year will also pull down overall inflation. “We doubt producer price inflation will rise much further,” he said.

The coal, chemicals and metals industries drove much of the price increases in August, according to a statement released alongside the data by Dong Lijuan, an NBS official.

Prices in the coal mining and washing sector grew 57.1 percent in August from a year earlier.

A separate NBS statement showed that the consumer price index (CPI) in August rose 0.8 percent from a year earlier, compared with a 1 percent gain in a poll and below the government target of around 3 percent this year. (SD-Agencies)