MJ Biotech, Inc. Submits Remaining Designs for CBD Extraction Facility, and A Second Basis for Additional Enlargement

Bloomberg

China’s producer prices are rising, adding to global inflation risks

(Bloomberg) – China’s producer prices rose at the fastest rate in over two years in February. This has resulted in more expensive oil, computer chip shortages and rising shipping costs as a tailwind for global inflationary pressures. China’s producer price index rose 1.7% year-on-year. Official data showed Wednesday was stronger than economists’ projections for a 1.5% increase from 0.3% in January. Consumer prices fell 0.2% yoy last month, slightly better than a forecasted 0.3% decline. As manufacturers around the world, resurgent producer prices in China increase the prospect of globally exported inflation as factories raise prices for goods sold overseas. The bond markets have already been plagued by the expectation that faster global growth and massive fiscal stimulus in the US will boost inflation. Chinese producer prices have made a significant contribution to global inflation over the past few decades as supply chains have become more integrated. Falling prices were a major driver of inflation in 2012-2016, making it difficult for central banks elsewhere to meet their persistent inflation targets. This time, inflation risks are moving in the other direction. Oil is up nearly $ 70 a barrel while copper and agricultural goods prices have increased. Shipping costs have increased, and a global shortage of computer chips could drive prices up. “Metal prices rose due to global tax incentives for infrastructure projects,” said Iris Pang, chief economist for Greater China at ING Groep NV in Hong Kong. “If the price of crude oil continues to rise, this would drive up other prices such as transport and thus production costs, which could lead to inflation.” it had fallen more than 5% in the past two days. The yuan, which appreciated about 0.2% against the dollar this year, was 0.1% weaker. Commodity Boom Rising commodity prices were the main boost to China’s producer inflation last month. The biggest gains were in mining, which rose 6.8% yoy in February, while commodity prices rose 2.9% after several months of decline. What Bloomberg Economics Says … Producer price inflation is likely to accelerate on a low basis provided commodity prices remain buoyant. This would support profit increases for industrial companies – positive for the economy. – David Qu, China economist. You can find the full report here. The government’s conservative economic growth target of more than 6% this year and the gradual removal of incentives could mean that China may play a smaller role in boosting commodity demand this year than it did in the years following the global financial crisis. “China could play a less dominant role in exporting global inflation as the government seeks to tighten tax incentives and real estate measures,” said Michelle Lam, Greater China economist at Societe Generale SA in Hong Kong. “The recent rise in commodity prices is largely due to major industrialized countries recovering from vaccination and the containment of Covid-19.” Consumer prices deflation in China eased last month and prices, which are still sharply different from cheaper pork, have been depressed, a key element in the country’s CPI cart. Pork prices were down 14.9% yoy in February, driven by the recovery in pig supply following the African swine fever outbreak in recent years. This trend could be reversed with the recurrence of the disease in parts of the country. However, the Bureau of Statistics cut the weight of pork in the CPI basket last month. With consumer spending still a weak spot for an otherwise strong economic recovery from the coronavirus pandemic, consumer inflation is likely to spike below Beijing’s 3% target. stay this year. Without the volatile energy and food costs, consumer prices remained unchanged from the previous year. “The weak CPI shows that there is no obvious inflationary pressure, unlike in the US, where CPI expectations have been revised,” said Hao Zhou, Senior Emerging Markets Economist at Commerzbank AG in Singapore. Subdued inflation will ease pressure on the People’s Bank of China, the country’s central bank, to tighten monetary policy, said Peiqian Liu, a Chinese economist at Natwest Markets in Singapore. However, the PBOC warned of financial risks such as asset bubbles and suggested a policy of gradual tightening: “We believe the PBOC can continue to neutralize monetary policy as credit growth gradually slows over the coming months,” she added at bloomberg .com can be found. Subscribe now to stay up to date on the most trusted business news source. © 2021 Bloomberg LP