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Inflation Figures In Focus, Due At 0230BST/0930HKT

CHINA
  • SocGen expects CPI to have rebounded in March due to positive base effects and a jump in food inflation. They add "the modest improvement in core prices was likely thanks to recovering residential inflation as well as recovering services activity, since social mobility started to rebound in late February."
  • Goldman Sachs expects muted CPI. "We expect CPI inflation to rebound to +0.2% yoy (Bloomberg consensus: +0.3% yoy) in March, vs -0.2% yoy in February. Food prices (in particular meat and vegetable prices) declined in March while nonfood prices probably rose slightly on a month-over-month basis. Our forecast implies CPI month-over-month annualized growth of 0.5%, vs 2.0% in February."
  • JP Morgan expects softer CPI and strong PPI reflation. On CPI the bank says "Early indicators suggest agricultural product prices slipped to -0.7%oya in March, the first negative reading since February 2018 (vs. +2.1%oya in February)."
  • On PPI JP Morgan says "The strong momentum in recent PPI reflation coincides with strong pickup in global commodity prices. We expect the momentum to continue in the next few months, driving PPI inflation to above 4%oya in 2Q, but come off to 2-3%oya by year-end. We expect PPI to grow 2.8%oya (or rising 0.6% m/m sa) in March."
  • Goldman Sachs have a similar outlook, weak CPI but a strong PPI print. "We expect PPI inflation to rise in March to 3.6% yoy (Bloomberg consensus: 3.6%), vs 1.7% yoy in February. Metal prices and the price indexes under the manufacturing PMI surveys continued to trend higher in March. Our forecast implies PPI month-over-month annualized growth of 13%, vs 11.6% in February."
  • SocGen expects PPI to see another strong pickup citing upstream drivers. "Upstream price pressures persisted in March, from fuel, iron ores, copper to steel. Besides the general strength in global commodity prices, a recent announcement of production restrictions in Tangshan amid pollution/emission concerns have dampened the rise in iron ore prices but pushed up steel prices further. Meanwhile, downstream inflation likely remained muted, but we have started to see anecdotes of price hikes on home appliances – initial signs of trickle-down of upstream inflation."
  • Standard Chartered are more positive citing commodity prices: "International commodity prices stayed at high levels during the month. As a result, import growth may have outpaced export growth. CPI likely returned to mild inflation on rising fuel prices, offsetting the drag from falling food prices. Petro-related industries' output prices likely rose further, lifting PPI inflation."
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