Shanghai PPI expands further

08:29, February 22, 2011      

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Shanghai's producer prices expanded further in January, and analysts feared that higher labor costs amid a shortage of migrant workers may fuel prices to rise faster.

The city's Producer Price Index, the factory-gate gauge of inflation, rose 2.1 percent from a year earlier last month, the Shanghai Statistics Bureau said yesterday. The pace was 0.2 percentage point quicker from that in December.

"The growth was comparatively mild," said Wang Zehua, an analyst at the bureau. "But considering higher labor costs and rising raw material prices around the world, manufacturers in the city may have to raise their production budgets in future."

China's PPI accelerated 6.6 percent year on year in January from the increase of 5.9 percent in December.

A shortage of migrant workers is becoming a problem for Shanghai's manufacturers who will have to bear with rising production costs. To lure the workers back to the city after the Spring Festival companies in Shanghai are offering various incentives, including chartering buses for their transport and paying commissions if they recommend fellow villagers or friends for work. Some companies even raised their workers' salaries by 30 percent.

However, the city still faces a 20-percent labor shortage in industries like construction and catering, according to local reports last week. Many migrant workers now choose to work in their hometowns or places nearby after companies relocated their factories to inland areas.

Shanghai's consumer prices gained 4.3 percent last month, lower than the national average and easing from December's 4.5 percent rise.

China's Consumer Price Index, the main gauge of inflation, rose an annual 4.9 percent in January.

Source: Shanghai Daily
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