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Factory gate prices in China rose at their fastest pace in 26 years for the second consecutive month in October, as fuel shortages bit at supply, official data released on Wednesday showed.

The producer price index rose 13.5 per cent compared to October 2020, higher than the 12.4 per cent forecast by analysts polled by Reuters. The jump was the highest since 1995. Last month, the PPI was up 10.7 per cent.

Consumer price inflation also quickened, with the CPI 1.5 per cent higher than at the same point a year ago, compared to 0.7 per cent in September.

Dong Lijuan, a statistician at the National Bureau of Statistics, said the PPI rise in October resulted from “the combined impact of international imported factors and the tight supply of crucial domestic energy and raw materials”.

Producer prices also increased by 2.5 per cent in the month compared to September, the NBS said. Dong noted that the rising cost of oil, which topped $85 dollars a barrel last month, and the price of coal, which reached Rmb2,301 ($360) a tonne, were important factors in the month-on-month increase.

Dong also said that raw production material prices had increased 17.9 per cent compared to October last year, while prices in the coal mining and washing industries had risen 103.7 per cent.

Julian Evans-Pritchard, an economist with Capital Economics, said China’s factory gate inflation was probably close to a peak as the energy crunch eased and coal prices started to fall.

“More fundamentally, we expect both domestic and foreign demand to soften over the coming quarters, further reducing the likelihood that temporary supply-side issues lead to a sustained rise in inflation,” he said.

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