China's Producer Price Growth at 12-year High

Prices jumped 10%

China's producer or wholesale prices rose at their steepest rate in 12 years in July, state media said on August 11, amid lingering concern about inflation in the world's fourth-largest economy.

The producer price index (PPI), which measures the value of finished products when they leave the factory, jumped 10% last month from a year earlier, the highest since 1996, the Xinhua news agency reported.

In the first seven months of the year, the index gained 8%, compared with a 7.6% rise in the first half, Xinhua said, citing the National Bureau of Statistics.

Prices for raw materials, fuel and power increased by 15.4% in July, 1.9 percentage points higher than the figure recorded in June.

Producer prices are a critical measure of economic trends because they tend to spill over into consumer prices, which directly affect China's 1.3 billion people.

Controlling prices remains a top priority for the government amid fears of public discontent if price hikes start eroding the purchasing power of the general population.

Copyright Agence France-Presse, 2008

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