China Mixed Consumer Inflation and Producer’s Deflation

China posted mild consumer inflation on Saturday, well below the annual target in July, giving authorities room to further relax monetary policy, but deflationary pressure for producers remained stubborn, highlighting a wobbly economic rebound.

Data from the National Bureau of Statistics (NBS) showed that the consumer price index (CPI) held steady at 2.3 percent year-on-year in July, while the producer price index (PPI) fell 0.9 percent for the 29th consecutive month.

Both indicators matched analyst forecasts.

 
Analysts attributed the steady CPI to slides in pric4es for fresh fruit and vegetables, which offset rises in other categories.

“In general, China’s inflation outlook remains mild; however, the deflation risks may even rise in the foreseeable future if the growth momentum weakens again,” ANZ economists Liu Li-Gang and Zhou Hao said in a research note, reacting to the data.

“Against this backdrop, the central bank should maintain an accommodative bias in the monetary policy stance.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza