Higher inflation in China and its impact on the outlook – UOB


Economist Ho Woei Chen, CFA, at UOB Group assessed the recent inflation figures in China and the prospects for the economic growth.

Key Quotes

“China’s Consumer Price Index (CPI) rose further to 3.0% y/y in Sep from 2.8% in Aug. This was above market’s forecast of 2.9% and was also the highest inflation rate since Oct 2013. The higher inflation was led by further surge in pork prices by 69.3% y/y in Sep (Aug: 46.7%), this pace of increase was last seen in 2007-2008. We estimate that pork price had contributed to around half of the headline inflation in Sep given the weight of pork in China’s CPI basket of around 2.34%”.

“Despite higher headline CPI, core inflation (excluding food and energy) has remained subdued at 1.5% y/y, unchanged from Aug and indicating a lack of demand side pressure”.

“Sep Producer Price Index (PPI) was in line with expectation at -1.2% vs -0.8% in Aug, with decline led by larger drop in raw material prices by 4.8% y/y. This was the third straight month of negative reading in PPI and the deflation is likely to persist given weak manufacturing outlook and subdued commodity prices. Nonetheless, on a m/m basis, PPI rose 0.1% after three preceding months of decline”.

The price data in Sep is in line with further monetary policy easing in China as growth comes under pressure. The 3Q19 GDP on Fri is expected to moderate further to 6.1% y/y (UOB est: 6.0%) from 6.2% in 2Q19”.

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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD pressured around 1.13 after jump in US jobs

EUR/USD is trading around 1.13, down after US Non-Farm Payrolls shocked with a leap of 2.5 million jobs in May, contrary to all projections. The greenback is gaining while stocks are falling, a correlation breakdown. ECB stimulus previously supported the euro.

EUR/USD News

GBP/USD retreats from highs

GBP/USD is trading below 1.27, off the highs. The pound is struggling after Chief EU Negotiator Barnier reported little progress in Brexit talks. Robust US jobs support the dollar.

GBP/USD News

Gold sees weekly closing below $1700 - a caution for bulls

The steady decline in Gold prices (futures on Comex) accelerated on Friday, as the rates closed the week below the 1700 mark for the first time in three weeks at 1688.35. A weekly closing below the key 1700 level is unlikely to bode well for the bulls.

Gold News

Institutional demand exceeds Bitcoins supply

Greyscale floods the market with fresh money to satisfy the demand of its clients. Investors, willing to pay a 29% surcharge for exposure to Bitcoin without suffering the legal and operational inconveniences. Market remains at risk on the verge of new bullish territory.

Read more

WTI rallies above $39 as focus shifts to OPEC+ meeting

Crude oil prices built on Thursday's modest gains and rose sharply on Friday boosted by the upbeat market mood optimism surrounding Saturday's OPEC+ meeting. 

Oil News

Forex MAJORS

Cryptocurrencies

Signatures