China's CPI eases to -0.1% m/m in June, a negative surprise

According to the latest data published by China’s the National Bureau of Statistics (NBS), the Chinese Consumer Price Index (MoM) (June) came in at -0.1% vs 0.0% exp and -0.2% last, while Consumer Price Index (YoY) (June) 1.9% vs 1.9% exp and 1.8% last.

Meanwhile, China’s Producer Price Index (YoY) (June) arrived at 4.7% vs 4.5% exp and 4.1% last.

Key Details (via Reuters):

“Raw material prices jumped 8.8 percent in June from a year earlier, compared with a 7.4 percent increase in May.

The core consumer price index, which strips out volatile food and energy prices, was unchanged at 1.9 percent in June.

The food price index rose 0.3 percent from a year earlier, after ticking up 0.1 percent in May. Non-food prices rose 2.2 percent, compared with 2.2 percent growth a month ago.”

Meanwhile, analysts at Nomura expected, PPI inflation to tick higher in June, mainly due to base effects. “As crude oil prices fell by 3.7% m-o-m in June (June 2017: -3.9%), their effect on PPI inflation should be slight. We expect CPI inflation to edge up by 0.1pp in June. High-frequency data suggest food price deflation moderated to -0.1% m-o-m in June from -0.2% in May; historical patterns suggest non-food price inflation will likely remain at 0.1% m-o-m in June.“

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.