Consumers and small businesses are feeling to pinch from the unexpectedly large rise in retail price inflation in September and hoping price rises will become moderate for the rest of the year, as the prices for most industrial goods have remained stable.

The consumer price index rose 3.1 percent year-on-year in September, a seven-month high, the National Bureau of Statistics said on Monday.

Food prices, which increased 6.1 percent in September, contributed 1.94 percentage points to the overall inflation figure.

Vegetable prices rose 18.9 percent, while meat product prices rose 6.6 percent, down from a 7.2-percent increase in August.

Li Da, the owner of a chain bakery in Wenzhou, Zhejiang province, already saw the impact of higher prices when he did the monthly shopping for his stores at the end of September.

"The prices of eggs, flour and milk have risen a bit in the past three months, while vegetables turned out to be more expensive, so I had to squeeze the budget for ingredients to make even a limited profit," said Li. He added that price fluctuations are a seasonal phenomenon, especially during frequent holidays in the autumn, which is fine as things will probably stabilize in the remainder of the year.

Meanwhile, the producer price index fell 1.3 percent in September from a year earlier, compared with a 1.6-percent drop in August, the NBS said.

The index, which measures inflation at the wholesale level, has been in negative territory for 19 consecutive months.

On a monthly basis, the PPI rose 0.2 percent in September, up slightly from a 0.1-percent increase for August, a positive sign of recovery industrial producers.

"Demand for steel-related products has increased slightly since August, compared with the beginning of the year, which was extremely gloomy with very few orders," said Zhang Weizhong, the general manager of Shanghai Kaike Pipe Industry Co Ltd.

Zhang's company has regular dealings with large State-owned companies such as China National Petroleum Corp, the nation's largest oil and gas producer and supplier and China Petrochemical Corp, a large petroleum and petrochemical group.

"The competition turned to be tougher compared with previous years as the government had fewer projects launched and postponed certain projects to lower fiscal expenditures, given slower economic growth," said Zhang.

Zhang added that there wouldn't be any broad-based, obvious improvement for the year, but things would definitely bounce back when delayed projects resumed in the following year.

The NBS figures show that both the ex-factory prices of products and the purchase cost of materials were up 0.2 percent, against a gain of 0.1 percent in August.

"I've received the latest quarterly report from my clients in Europe (showing) that sales increased nearly 10 percent compared with the previous year, which would have an effect on future orders very soon," said Chen Xi, manager of Wenzhou Dongyi Shoes Co Ltd.

To stand out amid tough industry competition, Chen has managed to raise prices for products with more added-value elements such as design and technical manufacturing processes.

yuran@chinadaily.com.cn

(China Daily USA 10/15/2013 page14)