Free Trial

CPI Headline Weakest Y/Y Pace Since 2009, PPI Steady But Still In Negative Territory

CHINA DATA

Jan inflation was noticeably weaker than expected from a headline CPI standpoint. We came in at -0.8% y/y, versus -0.5% forecast and -0.3% prior. The PPI was close to expected at -2.5% y/y, versus -2.6% forecast and -2.7% prior.

  • On CPI, the y/y headline drop was the weakest pace since 2009. The +2.1%y/y rise in Jan last year is obviously a headwind from a base effect standpoint. In m/m terms, prices were +0.3%, versus a 0.1% gain in Dec.
  • Still core inflation eased to 0.4% y/y after 3 straight months of 0.6% outcomes. Consumer goods fell -1.7% y/y, services inflation to 0.5%y/y from 1.0% in Dec.
  • By product we saw big drags from food -3.6% y/y (prior -2.0%) and -2.4%y/y from transport. Positives were clothing, +1.36% y/y and household items, at least relative to Dec outcomes.
  • The core trend is consistent with a lower yield backdrop, see the chart below.

Fig 1: China Core CPI Y/Y Versus 10yr CGB Yield

Source: MNI - Market News/Bloomberg

  • On the PPI side, the trend has only improved modestly in the past 6 months and we remain wedged in negative y/y territory. In terms of the detail, Mining and raw materials PPI showed some sequential y/y improvement but there were similar trends elsewhere.
  • Manufacturing PPI came in at -3.1% y/y (versus -3.2% prior), while consumer durables were -2.3% y/y (versus -2.2% prior).

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.