China’s factory-gate inflation was

higher than expected in March, official data showed Monday, as Russia’s war
on Ukraine pushes up oil prices and a domestic Covid-19 resurgence strains
food supplies.

The producer price index (PPI) — measuring the cost of goods at the
factory gate — grew 8.3 percent on-year, National Bureau of Statistics (NBS)
figures showed.

This was up on a monthly basis, and slightly more than a Bloomberg poll of
economists expected.

“Geopolitical and other factors have pushed global commodity prices to
continue increasing, driving the prices of oil, non-ferrous metals and other
related industries to rise further domestically,” NBS senior statistician
Dong Lijuan said in a statement.

China’s consumer price index (CPI), a key gauge of retail inflation, also
rose more than expected, by 1.5 percent on-year in March, the NBS said.

Although consumer demand eased after festive periods earlier in the year,
some food prices have picked up due to “rising international prices of wheat,
corn and soybeans” and domestic Covid-19 outbreaks, Dong said.

This comes as world food prices hit an all-time high in March following
Russia’s invasion of Ukraine, an agricultural powerhouse, according to a UN
agency.

Russia and Ukraine make up a massive share of exports in major commodities
such as wheat, vegetable oil and corn.

“CPI inflation could rise further in April as households across China have
been stocking up on food and other necessities after taking lessons from the
fallout of Shanghai’s lockdown,” Nomura’s chief China economist Lu Ting told
AFP.

As the financial hub locked down almost entirely in recent weeks,
residents had trouble getting groceries while Covid controls snarled supply
chains leading to the rest of the country.

“Due to lockdowns and transport disruptions in northeast China, the
largest grain production base in China, this year’s spring farming may have
been delayed and the risk of food shortage may rise in the second half,” Lu
added.

This piles pressure on the worsening global food shortage caused by the
military conflict in Ukraine, he said.