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CHINA: CPI and PPI Now in Deflation.   

CHINA
EM BulletAPACChinaEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets
  • Over the weekend China’s February PPI and CPI was released showing deflation is firmly entrenched in the economy.
  • PPI has been stuck firmly negative for multiple years now, showing the challenges companies face after 29 consecutive months of decline.
  • For CPI it was the first time it had fallen back into deflation in over a year.
  • Data across the region has been distorted by an earlier than usual Lunar New Year impacting the year on year data.
  • Despite this consumer inflation is still at lows in recent months with core down and services inflation in decline.
  • CPI declined -0.7%, down from 5% in January, worse than consensus of -0.4%.
  • Food prices declined -3.3%, consumer goods down -0.9%, services down -0.4% and new energy vehicles down 6%
  • China has set its inflation target at the lowest level in two decades  at 2% for 2025 as authorities recognizes the challenges ahead.
  • The numbers put pressure on the authorities to act with a fiscal and monetary response and it is anticipated that policy changes could be announced soon.
  • The Government has set the GDP target for 2025 at 5% with increased spending and bond issuance for regional governments agreed. 
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  • Over the weekend China’s February PPI and CPI was released showing deflation is firmly entrenched in the economy.
  • PPI has been stuck firmly negative for multiple years now, showing the challenges companies face after 29 consecutive months of decline.
  • For CPI it was the first time it had fallen back into deflation in over a year.
  • Data across the region has been distorted by an earlier than usual Lunar New Year impacting the year on year data.
  • Despite this consumer inflation is still at lows in recent months with core down and services inflation in decline.
  • CPI declined -0.7%, down from 5% in January, worse than consensus of -0.4%.
  • Food prices declined -3.3%, consumer goods down -0.9%, services down -0.4% and new energy vehicles down 6%
  • China has set its inflation target at the lowest level in two decades  at 2% for 2025 as authorities recognizes the challenges ahead.
  • The numbers put pressure on the authorities to act with a fiscal and monetary response and it is anticipated that policy changes could be announced soon.
  • The Government has set the GDP target for 2025 at 5% with increased spending and bond issuance for regional governments agreed. 
image