China producer prices rise for second straight month

Price for goods at the factory gate rose in China for the second straight month in October, officials said on Wednesday, in a sign of strengthening demand in the world's second-largest economy.

The producer price index (PPI) rose 1.2% year-on-year in the month, according to the National Bureau of Statistics (NBS), adding it "rebounded obviously".

In September, the index ended more than four years of falls, rising 0.1% on-year and offering some relief to longstanding concerns about deflation.

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Chinese firms have for years been battered by falling prices for their goods in the face of chronic overcapacity and weak demand, putting a damper on growth in a key driver of the world economy.

Protracted drops in PPI bode ill for industrial prospects and economic growth, as they put off customers -- who seek to delay purchases in anticipation of cheaper deals in the future -- starving companies of business and funds.

October`s figure exceeded economist expectations of a 0.9% increase in a Bloomberg poll.

"Consumer and producer prices are both rising at a comfortable pace, with deflation fears no longer a pressing concern," Julian Evans-Pritchard of Capital Economics said in a note.

Surging prices for key industrial commodities, particularly coal, appeared to drive the increase, and "the trend will continue for a while until it heads down next year", Larry Hu of Macquarie Securities in Hong Kong told Bloomberg.

"The readings show that China`s economy has stabilised."

The consumer price index (CPI), a key gauge of retail inflation, matched expectations with an increase of 2.1% on the back of rising food, housing, and health care costs, data showed.

Looking ahead, Evans-Pritchard said the introduction of policies designed to control housing prices and loose credit will start to rein in consumer inflation.

Other data have showed a mixed picture of the Chinese economy, as exports sank for the seventh straight month and came in below forecasts in October.

Overseas shipments fell 7.3% year-on-year, while imports also dropped 1.4%, Customs said on Tuesday.