China: CPI inflation slightly higher – Nomura
|Analysts at Nomura note that China’s CPI inflation edged up by 0.2pp to 2.1% y-o-y in July (Consensus: 2.0%; Nomura: 1.8%; Figure 3), slightly higher than the average in H1 (2.0%) and above the 2017 level (1.6%).
Key Quotes
“Both food and non-food price inflation rose by 0.2pp in July, taking food price inflation to 0.5% y-o-y (H1: 1.2%; 2017: -1.4%) and non-food price inflation to 2.4% y-o-y (H1: 2.2%; 2017: 2.3%).”
“The continued rise of food price inflation was mainly led by pork and fruit prices in July, inflation of which rose by 3.2pp and 5.7pp, respectively, to -9.6% y-o-y and 0.4% in July.”
“In month-on-month terms, CPI inflation edged up to 0.3% in July from - 0.1% in June. Food price inflation climbed further by 0.9pp to 0.1% m-o-m, from a recent low of -4.2% in March, while non-food price inflation rose to 0.3% m-o-m.”
“We note that the ratio of hog-to-corn price (monthly average ratio of 22 provinces, released by the China Animal Agriculture Association, a Ministry of Agriculture affiliate) rose to 6.5x in July from 5.9x in June, exceeding hog producers’ breakeven level of 6x, implying upside pressure on pork prices may have eased somewhat.”
“We believe inflationary pressures should remain contained given already-high household leverage and weakening domestic demand.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.