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Inflation Data on Tap, Credit Figures Also Due

CHINA

May inflation figures print for China today. PPI is expected to moderate to 6.4% YoY from 8.0% in April. CPI is expected to tick up to 2.2% from 2.1% in YoY terms. Credit figures are also due any day now, with the release window being from the 9th of June to the 15th.

  • The PPI is expected to benefit from base effects and lower onshore commodity prices during May, as Shanghai remained in lockdown. PMI price gauges suggest reduced upstream price pressures as well. Higher oil could be an offset though.
  • On the CPI front, lockdown hit consumer related spending should weigh on discretionary prices, but the volatile food component may still lift headline CPI. Note last month core CPI (ex food and energy) eased to 0.90% YoY in April, back to mid-2021 lows.
  • Recall last month the upside surprise on both the CPI and PPI saw the consensus shift on the 1yr MLF rate outcome. Prior to the April inflation data, the consensus had been looking for a small cut in the MLF rate, but this shifted to no change post the data, which in the event was the delivered outcome (steady at 2.85%).
  • In terms of the credit data, the market is looking for a sharp pick up in both aggregate finance (to 2030bn yuan from 910.2bn) and new loans for May (1223bn yuan from 645.4bn yuan).

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