China’s headline CPI inflation rose further to 2.5% y-o-y in September from 2.3% in August, in line with market consensus (Consensus: 2.5%; Nomura: 2.1%), resulting in a 2.1% average inflation rate over the first nine months of 2018 (2017: 1.6%), notes the research team at Nomura.
Key Quotes
“The moderate rise was mainly led by food price inflation, which climbed to 3.6% y-o-y in September from 1.7% in August (January-August: 1.2%; 2017: -1.4%), more than offsetting the fall in non-food price inflation (2.2% y-o-y from 2.5% in August; January-August: 2.2%; 2017: 2.3%). Excluding the food and energy components, core CPI inflation moderated by 0.3 percentage points (pp) to 1.7% y-o-y in September (January-August: 2.0%; 2017: 2.2%). In month-on-month terms, CPI inflation was unchanged from August at 0.7%.”
“Of the major components in the CPI basket, rental price inflation stabilised at 2.6% y-o-y in September, unchanged from August, in line with our view that market concerns over surging rental prices in a few top-tier cities (especially Beijing and Shenzhen) seem overdone.”
“Vegetable price inflation spiked to 14.6% y-o-y from 4.3% in August, but we believe further upside risk from the August floods should be limited.”
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