China Producer Price Reflation Moderates as Commodities Cool Off

China’s producer prices surged again at close to the quickest pace since 2008 last month, though pulled back slightly from February, suggesting the reflationary boon to industrial profits is set to moderate.

The revival in China’s producer prices -- driven in part by higher commodity prices and a pick up in industrial activity -- has helped fuel the world’s shift away from deflationary pressures. The rebound aided company profits while providing the government respite to rein in borrowing, tighten monetary policy, and cool a frenzy of speculation in the housing market. PPI gains are forecast to moderate in coming quarters as low year-earlier figures fall away.