By Gina Lee

Investing.com – Chinese in October, with factory gate prices rising at their fastest pace in 26 years.

Data from the National Bureau of Statistics (NBS), released earlier today, showed that producer price index (PPI), grew 13.5%. Investing.com had made forecasts for a 12.4% increase and a 10.7% rise in the month before.

According to Dong Lijuan, a senior NBS statistician and NBS Senior Statistician, the jump in PPI was caused by import inflation and tight domestic supplies of major energy sources and raw materials.

NBS data showed also that consumer price index (CPI), grew 0.7%. Investing.com predicted a 0.7% increase, as opposed to 0.1% in the month before.

CPI grew 1.5% last month, according to Investing.com. This is compared with 0.7% in October. The NBS stated that this increase was due to weather conditions, tight supply for some goods and rising prices.

Inflation pass-through between producers and consumers is generally subdued, as evidenced by the CPI’s higher level. There are indications that households are being affected by rising cost pressures.

The data “implies broad-based inflation pressure on both the production side and the consumer side,” China Renaissance Securities Hong Kong Ltd. head of macro and strategy research Bruce Pang told Bloomberg.

“Inflationary pressure and the more hawkish stance of monetary policy in other major economies will likely limit China’s room to maneuver for monetary easing.”

The data comes as China’s economic recovery from COVID-19 shows signs of slowing down, with the GDP widely expected to slow further in the fourth quarter from the one-year low of 4.9% reported in the third quarter.

“The acceleration in China’s inflation in October is probably a bit of a sideshow for the People’s Bank of China (PBOC), we don’t expect PBOC to take its eye off the need to cushion a slowdown in the economy. We still expect that it will cut banks’ required reserve ratio by another 50 basis points in the next month or so,” said Bloomberg China economist David Qu.