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China's inflation reaches 13-month high

10 November 2021 13:30 (UTC +04:00)

Shares opened higher in Europe after mostly falling in Asia on Wednesday as China reported that inflation surged in October, APA reports citing AP.

Benchmarks were higher in London, Paris and Hong Kong but fell in Tokyo and Shanghai.

China’s consumer price index, a main measure of inflation, rose 1.5% in October, up from 0.7% the month before, the National Bureau of Statistics reported. The surge to a 13-month high was driven mainly by a jump in prices for food and fuel, it said.

Producer prices, or wholesale prices, climbed 13.5%, adding to worries that price pressures might limit the central bank’s ability to adjust its policies to bolster growth.

Chinese markets initially fell following the report, though Hong Kong’s Hang Seng recovered from early losses, gaining 0.7% to 24,996.14. The Shanghai Composite index also trimmed its morning losses but still ended 0.4% lower at 3,492.46.

In early European trading, Britain’s FTSE 100 climbed 0.4% to 7,300.26 while the CAC 40 in Paris edged 0.1% higher to 7,050.02. Germany’s DAX was nearly unchanged at 16,041.62.

The futures for the S&P 500 and the Dow industrials both edged 0.1% lower.

The yield on the 10-year Treasury rose to 1.47% from 1.44% late Tuesday.

Elsewhere in Asia, Tokyo’s Nikkei 225 lost 0.6% to 29,106.78 and the Kospi in South Korea declined 1.1% to 2,930.17. Australia’s S&P/ASX 200 gave up 0.1% to 7,423.90. Shares rose in India and Taiwan.

The specter of stubbornly high inflation has haunted the markets for months and China’s latest data added to signs it is not dissipating quickly.

But the latest numbers were exaggerated by low comparative data from last year and underlying price pressures remain low, Julian Evans-Pritchard of Capital Economics said in a report.

“We continue to think that consumer price inflation will remain below 2% in the coming quarters and that inflation is unlikely to be a major constraint on the PBOC’s ability to loosen monetary policy,” he said.