Why Soaring Factory Prices In China Can Impact U.S Inflation

The economies of the United States and China are inextricably linked. China's manufacturing is experiencing a record 13.5 percent inflation.

The increased costs are unlikely to be absorbed by Chinese manufacturers and instead passed on to American consumers. Shipping costs are skyrocketing, so prices will rise as a result of that as well. The ripple effect could add to the United States' high inflation woes.

China's Manufacturing Inflation

China's factory-gate inflation rose to 13.5% in October, up from 10.7% in September, the fastest rise since China began providing such data in October 1996. Factory-gate prices are wholesalers' prices at the manufacturer's door and do not include shipping and handling costs.

Thirty-six of 40 industrial sectors, including coal mining and oil and gas, reported higher production costs.