CHINA’S factory-gate prices grew at their slowest pace in eight months in February as consumer price inflation stayed flat, official data showed yesterday, leaving room for the central bank to ease monetary policy to boost demand.

The producer price index (PPI) increased 8.8 percent year on year, the National Bureau of Statistics (NBS) said in a statement yesterday, easing from 9.1 percent growth in January.

Many Chinese factories closed in the first half of February due to Lunar New Year festivities, putting a temporary leash on demand for raw materials. But the war in Ukraine has since raised concerns of supply disruptions, pushing energy and global commodities prices to decade-highs.

However, on a monthly basis, PPI swung to positive territory last month, ticking up 0.5 percent amid a rise in the prices of international commodities like crude oil and non-ferrous metals, said Dong Lijuan, a senior statistician with the NBS.

The sharp rise in international crude prices has driven up prices in domestic oil-related industries, while coal prices have continued to fall, the NBS said.

On Monday, an official at the country’s top economic planner also said China’s efforts to stabilize commodity prices face new challenges due to high prices for coal, natural gas and iron ore because of COVID-19, a monetary policy shift in big economies and geopolitical conflicts.

The main drivers for PPI last month were higher prices of oil, gas and iron ore, official data showed.

China sources more than 70 percent of its oil and 40 percent of its gas from overseas even as the government races to increase domestic output.

Some analysts said the scope for monetary easing may be limited due to the threat of higher commodity prices.

China’s consumer price index (CPI) increased 0.9 percent from a year earlier last month, on par with the pace recorded in January and also in line with market expectations.

(SD-Agencies)