China's Highest Producer Inflation In Over 12 Years Highlights Global Price Pressures

• China's May factory gate prices rose at their fastest annual pace in over 12 years due to surging commodity prices, highlighting global inflation pressures at a time when policymakers are trying to revitalize COVID-hit growth. 
• Investors are increasingly worried pandemic-driven stimulus measures could supercharge global inflation and force central banks to tighten policy, potentially curbing the recovery. China's producer price index (PPI) increased 9.0%, the National Bureau of Statistics (NBS) said on Wednesday, as prices bounced back from last year's pandemic lows. 
• The PPI rise in May - the fastest on-year gain for any month since September 2008 - was driven by significant price increases in crude oil, iron ore and non-ferrous metals, the NBS said. Analysts in a Reuters poll had expected the PPI to rise 8.5% after a 6.8% increase in April. The PPI surge has yet to substantially feed through to consumer inflation, meaning the People's Bank of China is unlikely to worry for now. 
• Consumer prices rose 1.3% in May - the biggest year-on-year increase in eight months - but came in below expectations for a 1.6% gain. Consumer inflation remained well below the government's official target of around 3%.

(Source: Reuters)