(Yicai) April 10 -- The prices of goods leaving factories in China rose for the first time in more than three years last month, as a result of higher global commodity costs and improved supply-demand conditions in some domestic industries.

The producer price index, a key gauge of factory gate prices, rose 0.5 percent in March from a year ago, the first increase since September 2022, according to data released today by the National Bureau of Statistics. That was more than the 0.4 percent predicted by economists surveyed by Yicai. The PMI began to improve from last August, bar a setback in November.

The sharp turnaround was largely thanks to the surging cost of crude oil, which lifted prices across the petrochemical industry, according to China Merchants Securities. Other factors were the return to work after the Chinese New Year holiday, resilient external demand, front-loaded fiscal stimulus, and the launch of major new projects, which boosted prices for energy, chemicals, steel, and cement, the brokerage said.

NBS statistician Dong Lijuan said international factors lifted prices or narrowed price declines, while better supply-demand dynamics in some domestic sectors also contributed.

Geopolitical tensions disrupted global energy supplies last month, driving up oil prices and tightening global liquidity, which along with a stronger US dollar weighed on metal prices, said Wen Bin, chief economist at China Minsheng Bank.

In China, higher petrochemical prices have been passed on to midstream and downstream industries, while prices for glass and rebar increased month-on-month, Wen said, adding that the front-loaded issuance of special purpose bonds also supported a rebound in infrastructure activity.

Looking ahead, NBS spokesperson Fu Linghui said China will focus on expanding domestic demand and optimizing supply, developing new quality productive forces tailored to local conditions, advancing the construction of a unified national market, and promoting industrial product prices to return to a reasonable range to support steady industrial growth.

Consumer inflation eased last month, the NBS data also showed. The consumer price index rose 1 percent year on year, down from February’s 1.3 percent gain and the 1.2 percent forecast by economists, while falling 0.7 percent on a monthly basis due to seasonal demand softening after the Chinese New Year holiday.

Fu previously said that despite global energy price swings and the imported inflationary impact, China has ample supply of goods and services, so the basis for price stability is unchanged.

He added that a more proactive economic policy, including measures to expand domestic demand, increase household incomes, foster new consumption scenarios, and improve the consumption environment, should help prices to pickup further.

Editor: Emmi Laine