Free Trial
US TSYS

Cycle Extremes Hold, For Now

CHINA PRESS

CCB To Set Up CNY30 Billion Housing Fund - Caixin

US TSY OPTIONS

TYX2 110.00/114.00 Strangle Blocked

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

China Inflation Surprises On The Downside

CHINA DATA

China inflation figures have surprised on the downside for July. Headline CPI printed at 2.7%, versus 2.9% expected. It was still a pick-up from last month though (2.5%), see the chart below (the white line is headline inflation). Prices in the month rose 0.5%. Upward momentum was mainly driven by higher food prices, which rose 6.3% in YoY, a strong step up from +2.9% last month, as pork prices surged 20% YoY. Non-food CPI rose 1.9% YoY, down from 2.5% last month, while core inflation, excluding food and energy slipped to 0.8% YoY, the softest pace since April 2021 (the orange line in the chart below).

  • Of the 8 sub-categories, outside of food, only one other (clothing) recorded a rise in YoY terms for July.
  • All in all, the inflation picture appears fairly consistent with a still soft domestic demand backdrop overall, and not an economy that is bumping up against capacity constraints.
  • Upstream prices pressures also moderated more than expected. The PPI was down -1.3% MoM, to +4.2% YoY, versus the market estimate of 4.9%.
  • Mining and raw materials showed further sharp falls in YoY momentum, but so did manufacturing. This sub-sector is back to +0.9% from +2.4% last month. The only place where upstream price momentum gained momentum was in the food sector

Fig 1: China Inflation, Momentum Slowed In July Outside of Food Prices

Keep reading...Show less
239 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

China inflation figures have surprised on the downside for July. Headline CPI printed at 2.7%, versus 2.9% expected. It was still a pick-up from last month though (2.5%), see the chart below (the white line is headline inflation). Prices in the month rose 0.5%. Upward momentum was mainly driven by higher food prices, which rose 6.3% in YoY, a strong step up from +2.9% last month, as pork prices surged 20% YoY. Non-food CPI rose 1.9% YoY, down from 2.5% last month, while core inflation, excluding food and energy slipped to 0.8% YoY, the softest pace since April 2021 (the orange line in the chart below).

  • Of the 8 sub-categories, outside of food, only one other (clothing) recorded a rise in YoY terms for July.
  • All in all, the inflation picture appears fairly consistent with a still soft domestic demand backdrop overall, and not an economy that is bumping up against capacity constraints.
  • Upstream prices pressures also moderated more than expected. The PPI was down -1.3% MoM, to +4.2% YoY, versus the market estimate of 4.9%.
  • Mining and raw materials showed further sharp falls in YoY momentum, but so did manufacturing. This sub-sector is back to +0.9% from +2.4% last month. The only place where upstream price momentum gained momentum was in the food sector

Fig 1: China Inflation, Momentum Slowed In July Outside of Food Prices

Keep reading...Show less