China: Inflation pressure keeps losing traction – UOB

Ho Woei Chen, CFA, Economist at UOB Group, assessed the latest inflation figures in the Chinese economy.

Key Quotes

“China’s Consumer Price Index (CPI) rose 2.5% y/y in June (Bloomberg est: 2.5%; May: 2.4%). This was led by higher food price inflation while core inflation (excluding food and energy) slipped to 0.9% from 1.1% in the two preceding months.”

“Producer Price Index (PPI) deflation eased to -3.0% y/y in June from -3.7% in May (Bloomberg est: -3.2%), marking the fifth straight month of declines.”

“Data indicates that the price pressure has remained weak in June despite continuing measures to boost demand and ensure ample market liquidity.”

“Weak Inflationary pressure supports monetary easing but PBoC is likely to adopt a more cautious stance as economy recovers.”