(Yicai Global) Nov. 10 -- The increase in China’s consumer prices picked up pace last month, after having slowed in the previous four months, while factory gate inflation rose by the most in 26 years, climbing for a 10th consecutive month.

The consumer price index rose 1.5 percent in October from a year earlier, mainly due to higher vegetable prices, according to data released by the National Bureau of Statistics today. The rate was 0.7 percent in September.

The producer price index jumped 13.5 percent amid higher prices for commodities, a power crunch and extreme weather, up from 10.7 percent in September. But the PPI may have almost peaked, according to analysts.

Prices of vegetables soared 15.9 percent last month from a year ago, affected by recent heavy rainfall, crop rotation from summer to autumn, sporadic Covid-19 outbreaks, and rising production and transportation costs. Prices had fallen 2.5 percent in September.

Food, especially vegetables, became pricier, while the decline in pork prices slowed significantly, Wu Chaoming, chief economist at Chasing Securities, told Yicai Global. Non-food products and services also became a bit costlier as producers passed on higher commodities prices, he said.

But the transmission of higher factory prices to consumer prices is limited to a few sectors such as fuel, analysts said.

The conditions are not there for a steep rise in the CPI next year, as the supply and demand of live pigs will come back to balance in the second half of 2022 and the PPI’s knock-on effect on the CPI is limited to just a few areas, according to China Merchant Securities. Consumption will recover in a slow and sustained manner next year, it added.

Thirty-six of the 40 industrial sectors the NBS surveyed saw prices increase again last month. Coal mining and washing industry prices doubled, widening 28.8 percentage points from September.

Eight industries drove the PPI up 11.4 percentage points, accounting for 80 percent of the total increase. Seven industries including oil and natural gas extraction, ferrous metal smelting and rolling, chemicals production, and non-ferrous metal smelting and rolling had price increases of between 12 percent and 60 percent.

The PPI will likely peak within a month or two due to government policy guaranteeing supplies and stabilizing prices, as well as falling prices of commodities including coal, according to Hongta Securities. The policy mainly targets coal and oil, while gas prices remain high and the pickup in the overseas supply chain is slow.

Editors: Liao Shumin, Futura Costaglione