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Analysts at TD Securities note that  China’s CPI rose by 3% y/y, 0.9% m/m, in September in line with their expectations, but slightly higher than consensus (2.9% y/y).

Key Quotes

“Once again the gain was due to pork prices which rose by 69.3% y/y but the monthly gain softened slightly to 19.7% m/m from 23.1% m/m previously. This drove overall food price inflation higher to 11.2% y/y. However, ex-food CPI continues to soften, falling to 1% y/y, its lowest since March 16.”

“Moreover PPI continues to be in deflation, dropping -1.2% y/y, a factor that continues to weigh on company profits. Overall, the increase in pork prices is not filtering through into broader prices (except other meat) and will not prevent the PBoC from undertaking further targeted easing.”