MNI China Daily Summary: Thursday, April 22

MNI BRIEF: China To Quicken Resolving Local Debt Risks

RPT-MNI INTERVIEW: ECB's Wunsch Sees At Least Two Cuts By Dec

MNI BRIEF: Brazil CenBank Faces Greater Uncertainty - Campos

MNI: PBOC Conducts CNY2 Bln Via OMO Mon; Liquidity Unchanged

CHINA PBOC INJECTS CNY2 BILLION VIA 7-DAY REVERSE REPOS MON

EZ/UK T-Bill Calendar: 3/6-Month ATB Auction on Tuesday

EZ/UK Bond Supply Calendar: EU, FI Synds; IT, DE Auctions Tues

MNI: CANADA MAR INDUSTRIAL PRICES +0.8% MOM; EX-ENERGY +0.8%

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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Back to Broad-Based Disinflation Trend In January

GERMAN DATA
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German final January HICP was unrevised from the flash readings as expected at 3.1% Y/Y (+3.8% Dec) and -0.2% M/M (+0.2% Dec). The final reading of CPI was also unrevised at 2.9% Y/Y (+3.7% Dec) and +0.2% M/M (+0.1% Dec). Core CPI printed at +3.4% Y/Y (+3.5% Dec). For the monthly headline CPI Y/Y, this represented a return to the downtrend prevalent before December's expected uptick.

  • The split among the main December CPI components confirmed the flash reading. Goods prices printed at 2.3% Y/Y (vs 4.1% Dec), services at +3.4% Y/Y (vs 3.2% Dec).
  • Energy was the main downward driver for the headline rate compared to December, regardless of the C02 price increase which came into effect in January, at -2.8% Y/Y (vs +4.1% Dec). Looking at underlying drivers from the subcategories that weren't available in the flash reading: household energy prices decreased -3.4% Y/Y (vs +7.7% prior), and fuels deflated -2.0% Y/Y (vs -1.1% prior).
  • Food prices, which were one of the main inflaiton upside drivers in 2023, but disinflated towards the end of the year, saw that trend continue in January, coming in at 3.8% Y/Y (vs +4.6% prior).
  • Within the core measure, specifically core goods, durable goods came in at +2.3% Y/Y (vs +2.9% prior). Within services, notable items were restaurant and hotel prices at +6.3% Y/Y (vs 5.6% prior), partly driven higher through January's restaurant tax increase, package holidays at +7.2% Y/Y (vs 3.0% prior), and net rents at +2.1% Y/Y (vs +2.0% prior). A subsidised public transport ticket introduced in May 2023 ("Deutschlandticket") continued to account for a low Y/Y figure for train and bus tickets (-23.3% Y/Y).
  • MNI's HICP inflation breadth indicator (see chart below) shows disinflation progresssing across a broad range of items, with the percentage of categories printing at or above 6% decreasing to 25.1%, down from 26.9% in December, and the percentage of categories printing below 2% increasing to 33.6%, up from 29.2%.
  • The key piece to observe the coming inflation releases will be services - after the stall in its yearly rate, service inflation is considered to be a main obstacle to an ECB rate cut - as stressed again by ECB's Schnabel in an interview on Wednesday.

MNI, Destatis

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German final January HICP was unrevised from the flash readings as expected at 3.1% Y/Y (+3.8% Dec) and -0.2% M/M (+0.2% Dec). The final reading of CPI was also unrevised at 2.9% Y/Y (+3.7% Dec) and +0.2% M/M (+0.1% Dec). Core CPI printed at +3.4% Y/Y (+3.5% Dec). For the monthly headline CPI Y/Y, this represented a return to the downtrend prevalent before December's expected uptick.

  • The split among the main December CPI components confirmed the flash reading. Goods prices printed at 2.3% Y/Y (vs 4.1% Dec), services at +3.4% Y/Y (vs 3.2% Dec).
  • Energy was the main downward driver for the headline rate compared to December, regardless of the C02 price increase which came into effect in January, at -2.8% Y/Y (vs +4.1% Dec). Looking at underlying drivers from the subcategories that weren't available in the flash reading: household energy prices decreased -3.4% Y/Y (vs +7.7% prior), and fuels deflated -2.0% Y/Y (vs -1.1% prior).
  • Food prices, which were one of the main inflaiton upside drivers in 2023, but disinflated towards the end of the year, saw that trend continue in January, coming in at 3.8% Y/Y (vs +4.6% prior).
  • Within the core measure, specifically core goods, durable goods came in at +2.3% Y/Y (vs +2.9% prior). Within services, notable items were restaurant and hotel prices at +6.3% Y/Y (vs 5.6% prior), partly driven higher through January's restaurant tax increase, package holidays at +7.2% Y/Y (vs 3.0% prior), and net rents at +2.1% Y/Y (vs +2.0% prior). A subsidised public transport ticket introduced in May 2023 ("Deutschlandticket") continued to account for a low Y/Y figure for train and bus tickets (-23.3% Y/Y).
  • MNI's HICP inflation breadth indicator (see chart below) shows disinflation progresssing across a broad range of items, with the percentage of categories printing at or above 6% decreasing to 25.1%, down from 26.9% in December, and the percentage of categories printing below 2% increasing to 33.6%, up from 29.2%.
  • The key piece to observe the coming inflation releases will be services - after the stall in its yearly rate, service inflation is considered to be a main obstacle to an ECB rate cut - as stressed again by ECB's Schnabel in an interview on Wednesday.

MNI, Destatis