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MNI: China Inflation Surge Limits Policy Space

MNI (Singapore)
SINGAPORE (MNI)

Headline inflation is rising, but weak core prices indicate soft internal demand, posing a problem for the PBOC, analysts say.

True

Headline inflation in China is facing upward pressure even as overall weak demand erodes underlying prices, adding to challenges for monetary policy, according to analysts after the pace of increases in CPI unexpectedly broke 2%.

Imported inflation may continue for a longer time as the Russia-Ukraine war smoulders on, and pork prices, an important driver of CPI, may rebound in the second half of the year, according to Sheng Songcheng, a former director of the Statistics and Analysis Department of the People's Bank of China, who wrote in a blog post. (See:MNI: Imports Fuel China Inflation, PBOC To Keep Easing-Advisors)

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Headline inflation in China is facing upward pressure even as overall weak demand erodes underlying prices, adding to challenges for monetary policy, according to analysts after the pace of increases in CPI unexpectedly broke 2%.

Imported inflation may continue for a longer time as the Russia-Ukraine war smoulders on, and pork prices, an important driver of CPI, may rebound in the second half of the year, according to Sheng Songcheng, a former director of the Statistics and Analysis Department of the People's Bank of China, who wrote in a blog post. (See:MNI: Imports Fuel China Inflation, PBOC To Keep Easing-Advisors)

Keep reading...Show less