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Breaking: China’s CPI inflation climbs to 1.2% YoY in April, vs 0.8% expected

China’s Consumer Price Index (CPI) climbed 1.2% in April from a year ago after arriving at a rise of 1.0% in March, the National Bureau of Statistics of China reported on Monday. The market consensus was for 0.8% in the reported period.

Chinese CPI inflation arrived at 0.3% MoM in April versus a fall of 0.7% prior, hotter than the expectation of a 0.1% decline.

China’s Producer Price Index (PPI) rose 2.8% YoY in April, following a 0.5% increase in March. The data came in above the market consensus of a 1.5% rise.

Market reaction to China’s CPI, PPI data

The China’s CPI and PPI data have little to no impact to the China-proxy Australian Dollar (AUD). At the press time, the AUD/USD pair is down 0.14% on the day to trade at 0.7235.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.15%0.25%0.17%0.06%0.15%0.23%0.21%
EUR-0.15%0.10%0.00%-0.12%0.00%0.08%0.06%
GBP-0.25%-0.10%-0.09%-0.22%-0.10%-0.02%-0.05%
JPY-0.17%0.00%0.09%-0.12%0.00%0.07%0.04%
CAD-0.06%0.12%0.22%0.12%0.13%0.14%0.15%
AUD-0.15%-0.01%0.10%-0.01%-0.13%0.06%0.05%
NZD-0.23%-0.08%0.02%-0.07%-0.14%-0.06%0.00%
CHF-0.21%-0.06%0.05%-0.04%-0.15%-0.05%-0.00%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).


This section was published on May 10 at 23:13 GMT as a preview of China’s CPI, PPI data.

China’s CPI, PPI Overview

The National Bureau of Statistics of China (NBS) will publish its data for April at 01.30 GMT. The Consumer Price Index (CPI) is expected to show an increase of 0.8% YoY in April, compared to 1.0% in March. The Producer Price Index (PPI) is projected to show a rise of 1.5% in March versus an increase of 0.5% prior.

The CPI is a key indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Meanwhile, the PPI is a measurement of the rate of inflation experienced by producers.

How could the China’s CPI, PPI affect AUD/USD?

AUD/USD trades on a negative note on the day in the lead up to China’s CPI, PPI data. The pair edges lower as the US Dollar (USD) strengthens amid cautious sentiment after US President Donald Trump and Iran rejected each other’s latest peace proposals to end the 10-week conflict

If data comes in better than expected, it could lift the Australian Dollar (AUD), with the first upside barrier seen at the May 6 high of 0.7277. The next resistance level emerges at the 0.7300 psychological level. The additional upside filter to watch is the March 4 high of 0.7380.

To the downside, the May 8 low and a round figure of 0.7200 will offer some comfort to buyers. Extended losses could see a drop to the May 4 low of 0.7153, followed by the April 30 low of 0.7110.

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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