Inflationary Pressures Continue in China’s Manufacturing Industry

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Dec. 3 – China’s manufacturing industry continued to perform well in November, but increasing costs are quickly becoming a challenge.

Statistics released by the China Federation of Logistics and Purchasing (CFLP) on Wednesday show that the manufacturing industry’s purchasing managers index (PMI) rose to 55.2 percent in November – an increase of 0.5 percent from a month earlier. This marks the fourth consecutive month of PMI growth in the industry. A PMI rating above 50 indicates economic expansion while a rating below 50 suggests that the economy is contracting.

Among the PMI’s 11 sub-indices, seven increased over the last month including the production, input price and stockpile indices, the CFLP reported.

Warning of the mounting inflationary challenges ahead, China’s input price index rose by 3.6 percentage points – the highest of the indices – to 73.5 percent in November, a far cry from the 50.4 percent it recorded in early July.

China’s consumer price index, a key gauge of inflation, rose to a 25-month high of 4.4 percent in October. CPI data for November, along with industrial production and fixed asset investment statistics, will be released on December 13.

Yu Yongding, a noted economist and former adviser to China’s central bank, said that inflation, caused by rising prices of imported commodities, was likely to be a major challenge for the country in 2011.

Specialists, however, hope a series of current inflation-curbing policies will show more effectiveness in December and soothe the price pressures on manufacturers, according to a report on China’s major portal Sina.