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MNI: Tame China CPI Leaves Room For Easing-Analysts

Lower-than-expected inflation in July leaves the PBOC more policy space, analysts say.

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Lower-than-expected Chinese inflation in July will provide more room for monetary easing to support the economy, analysts said, pointing to the prospect that imported price rises could slacken as the global economy slows.

While inflation rose to a two-year high 2.7% y/y in July from June’s 2.5%, price rises were mainly driven by food. Pork prices soared by 20.2% y/y, reversing the previous month’s 6% decline, and adding 0.43 percentage point to overall inflation, according to Wang Qing, chief analyst of Golden Credit Rating. Vegetable prices jumped by 12.9% y/y, up from the previous 3.7% gain, due to hot weather, buoying CPI by 0.17 pp.

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Lower-than-expected Chinese inflation in July will provide more room for monetary easing to support the economy, analysts said, pointing to the prospect that imported price rises could slacken as the global economy slows.

While inflation rose to a two-year high 2.7% y/y in July from June’s 2.5%, price rises were mainly driven by food. Pork prices soared by 20.2% y/y, reversing the previous month’s 6% decline, and adding 0.43 percentage point to overall inflation, according to Wang Qing, chief analyst of Golden Credit Rating. Vegetable prices jumped by 12.9% y/y, up from the previous 3.7% gain, due to hot weather, buoying CPI by 0.17 pp.

Keep reading...Show less