People's Daily Online reported that the Producer Price Index was in a rapid growth phase during the same period in 2008 although the negative impact of the international financial crisis on the real economy is still increasing. However, PPI has dropped faster in May 2009 compared with the same period last year. In the short term, the over-supply of China's industrial products is difficult to change, thereby inhibiting the rapid rise of China's PPI.

It is noteworthy that, prices of the main products of oil and gas exploration, petroleum processing and coking, chemical fibers, non ferrous metal smelting and rolling processing industry have been higher than the previous 3 months showing a clear trend of recovery.

The negative impact of the global financial crisis on the real economy is becoming greater. Although governments around the world have taken various policy measures in response to the financial crisis this year and a number of economic indicators are showing signs of stabilization on the whole, the recession of major economies continues and global demand is still sluggish.

Despite that, in the last two months prices of some basic products rebounded thanks to sufficient liquidity but prices are still lower than last year especially the prices of consumer goods that are generally going down.

In May 2009, PPI and Purchasing Price Index of Raw Material, Fuel and Power rose by 0.1 % and 0.6% respectively on the previous month. In the first 8 months of 2008, PPI was in a fast-track climbing stage. In May 2008, PPI and PPIRM rose by 0.8% and 1.3% on April significantly higher than the growth rate in May of this year. Therefore decline in PPI in May 2009 continues to widen YoY.

Since PPI turned from negative to positive for the first time in April this year it has been rising for 2 months, thus put an end to seven consecutive months of decline. Compared with the previous month, in April and May of 2009, PPI rose by 0.2% and 0.1%, and PPIRM rose by 0.8% and 0.6%.

(Sourced from People's Daily Online)