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.
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
Source: MNI/Market News/Bloomberg
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.