World Bank: Efficiency helping to offset 6.5% inflation

Increasing efficiency in Chinese firms is allowing them to absorb some of the rising costs of commodity prices, according to a recent report by the World Bank. The report found that Chinese firms' profit margins have been widening over the last few years, despite significant increases in the cost of labor and commodities, The Wall Street Journal reported. The report estimates labor productivity in the manufacturing sector increased by 23% a year and efficiency of raw material use increased by 1.6% a year from 2002 to 2006. So far, these improvements have limited the impact of inflation on Chinese consumers. China's inflation grew 6.5% from the previous year in October, according to data released yesterday, matching the 11-year high reached in August. Most of that increase has been attributed to food prices, leaving the nonfood inflation rate at a mere 1.1%, but the prices of raw materials such as steel, cement, and fuels grew by 3.6%
by the end of September.