CPI & PPI On Tap Today

China inflation figures print today. Headline CPI is expected to rise to 2.9% from 2.5% last month in YoY terms. The PPI is expected to moderate further to 4.9% from 6.1% YoY in June.

• Greater focus is likely to rest on the CPI print. Upside pressures are emanating from food (which was already at 2.9% YoY in June). Such pressures are expected to have continued in July.
• Recall last week there was also focus on comments from China Premier Li Keqiang around China tolerating potentially higher inflation rates in 2022 (although not beyond 3.5%).
• The China Securities Journal stated yesterday that China is unlikely to cut key rates and the RRR in the second half, citing onshore analysts. Higher inflation pressures in China was cited as one factor, along with a widening US-China rate differential.
• Core inflation has remained fairly benign though, ticking up to 1.0% YoY in June. Weaker domestic demand is expected to keep a cap underlying inflation pressures.
• For PPI, base effects and lower upstream commodity price pressures are seen as driving the lower YoY result.
• Note we are still waiting for aggregate financing figures for July. These figures are due any day between now and the 15th of August.