China: Producer Prices rose to record highs – UOB
|Economist at UOB Group Ho Woei Chen, CFA, comments on the release of the Producer Prices in the Chinese economy.
Key Takeaways
“China’s Producer Price Index (PPI) inflation surged to a record high of 10.7% y/y in September (Bloomberg est: 10.5%; Aug: 9.5%) while Consumer Price Index (CPI) rose at a more subdued pace of 0.7% y/y (Bloomberg est: 0.8%; Aug: 0.8%) due to a larger food price deflation.”
“We estimate the impact of the electricity price hike will bring the PPI close to 12% y/y in 4Q21. With the PPI averaging 6.7% y/y YTD and further upside price pressure, we are raising our full-year PPI forecast to 8.0% from 7.5% (2020: -1.8%).”
“CPI inflation averaged just 0.6% y/y YTD as a result of limited pass-through from higher PPI. Having said that, we expect CPI gains to pick up in 4Q21, due to a low base of comparison while pass-through from higher energy prices is also expected to increase. For now, we maintain our full-year 2021 CPI forecast at 0.8% (2020: 2.5%) with consumer price inflation expected to rise to 1.7% y/y in 4Q21.”
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.