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Chinese Inflation Slows Further, Credit Impulse Leads

CHINA

The headline Chinese CPI & PPI Y/Y releases provided notable misses in December (1.5% vs. BBG median 1.7% and 10.3% vs. BBG median 11.3%, respectively) as inflationary pressures eased back, with the drop in the 12-month Chinese credit impulse aiding the move lower (based on the previously outlined lagged impact). As we noted ahead of the release, a decrease in inflationary pressures leaves more room for policy easing (with Beijing already tipping their hat towards more pro-growth policy moves in recent months), which could support domestic risky assets such as equities that are currently trading at 'distressed' levels.


Fig. 1: Chinese CPI & PPI Y/Y (%)

Source: MNI - Market News/Bloomberg

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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