PPI up 8.2%   

China's producer price index (PPI) in May surged by 8.2% year-on-year, hitting the new high since November 2004, the National Bureau of Statistics (NBS) released on June 11th.
   The yearly growth of PPI this May saw an increase of 0.1 percent point from this April, and 5.4 percent points from that of May 2007, driven by growing prices of industrial products.
   The ex-factory prices of industrial products in May rose 8.2% year-on-year while the purchasing prices of raw material, fuel and power were averagely up 11.9%.
   The ex-factory price of crude oil this May rose 30.9% year-on-year. The ex-factory prices of gasoline, diesel and kerosene raised 11.0%, 11.8% and 11.4% respectively.
   In reference to chemicals, the ex-factory price in May was up 2.1% for polystyrene; up 27.7% for cis-polybutadiene rubber and down 4.6% for polyester filament.
   In the previous five months of 2008, the ex-factory prices of industrial products went averagely up 7.4%, and the purchasing prices of raw materials, fuel and electricity were averagely up 10.6%.
   The rising PPI figure this May indicates heavy pressure on the CPI in the coming months this year, analysts comment it.
   The government will take three measures to curb PPI increase, including anchoring ex-factory prices of industrial products, limiting exports on raw materials and fuels and macro control and supervision on fixed asset investment.
   In addition, NBS announced the CPI growth this May of 7.7% year-on-year, 0.8 percentage points lower than 8.5% in April.
   The CPI went down in May largely because growth of food prices, the main driver of inflation, has slowed from 22.1% in April to 19.9% this May. NBS says the agricultural food prices have dropped for consecutive eight weeks, and agricultural supplies have recovered from the effect of severe blizzards early this year.
   The government hopes that the consumer inflation will continue the downward trend in the coming months.
    "Producers will transfer their cost pressures on to consumers", economists expressed, "The authorities should work hard to prevent both economic overheating and high inflation."
   Besides, economists underlined reconstruction on quake-hit areas in Sichuan province will increase demands for cement, steel, copper, aluminum and other construction materials, adding pressure on controlling price increases.