Breaking: Chinese inflation data beats but does little to move the needle in an embattled AUD

China's inflation data has been released and the combination of lockdowns, a lower base in April last year and higher pork prices, suggested that April's CPI print would reveal a worsening in inflationary pressures.

Producer Prices, on the other hand, were expected to moderate as industrial commodities, bulks, steel and oil prices have dropped over the month.

The data has arrived as follows:

China CPI

China April CPI +2.1% YoY (Reuters poll +1.8% ) vs. prior 1.5%

China April CPI +0.4% MoM (Reuters poll +0.2%) vs. prior 0%.

China PPI

China April PPI +8.0 pct from a year ago (Reuters poll +7.7 pct) vs. prior 8.3%.

China April PPI +0.6 pct from previous month.

Market reaction

There was a 5 pip downside move in AUD/USD as the data came out. 

However, AUD trades as a proxy for the performance of the Chinese economy and the following illustrates a near to longer-term outlook for the currency vs. the US dollar. 

AUD/USD Price Analysis: Longer-term 'Shorts' eye a run to June 2020 lows, 0.6776

About China CPI

The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index. The purchase power of the CNY is dragged down by inflation.

The CPI is a key indicator to measure inflation and changes in purchasing trends. A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the CNY.