China's producer prices surge the most since 2008, cutting into business profits

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More pessimistic businesses expect the price increases will last until the end of the year, said Gan Jie, a Cheung Kong Graduate School of Business professor.

, particularly those affected by rising raw material prices.

He noted that their operating profit margin of 6% in the first four months of the year was 2 percentage points lower than that of large enterprises — a gap that is increasing. On the other hand, private consumer costs rose only slightly. The statistics bureau said Wednesday that the consumer price index rose 1.3% year on year in May, missing expectations for a 1.6% increase. The index has been dragged down by aChina's manufacturers also face pressure from an expected drop in overseas purchases.

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