China announced 0.1 percent increase in Producer Price Index on year-on-year basis for the month of September.

Its consumer price index also showed an improvement of 1.9 percent during the same period. These will reportedl have a positive impact on the Europe and US markets, as factory gate costs are closely linked to the export prices.

Like Us on Facebook

Meanwhile, the producer price index was up for the first time in 54 months. In August, it dropped by 0.8 percent.

The consumer price index was likewise higher than the expected growth of 1.9 percent. In August, it just recorded an increase of 1.3 percent.

According to Bloomberg, producer pricing index for mining goods showed 2.1 percent increase, while food prices were up by 0.3 percent. Non-food consumer price rose 1.6 percent.

Gao Yuwei, a researcher at Bank of China, said the increase in produce price index may signal the end of PPI deflation. It is a good sign as it shows that the economy is stabilizing.

It was pointed out that the increase in factory gate prices is desirable as the deflationary pressure wears off. The acceleration also shows an improving business environment for Chinese factories as they have been affected by depressed selling prices of their goods.

As explained, the main reason behind the increase in index is the robust global commodity prices, as well as the Chinese government's commitment to look for strategies to manage its excess capacity in various industrial segments, such as coal and steel.

Its efforts to control corporate debt are also likely to have contributed to this economic condition, in general. The rising prices will further help the companies in lowering their liabilities by paying off pending loans.

TagsProducer Price Index, china, consumer price index