Economist at UOB Group Ho Woei Chen, CFA, assessed the latest set of inflation figures in the Chinese economy.
Key Quotes
“China’s Consumer Price Index (CPI) moderated to 2.4% y/y in August… Food price inflation eased to 11.2% y/y from 13.2% y/y in July while core inflation (excluding food and energy) was unchanged at 0.5% y/y. Given the high base of comparison, we expect the headline inflation to moderate to under 2.0% in 4Q with full-year averaging around 3.0%.”
“Producer Price Index (PPI) deflation continued to ease to -2.0% y/y in August… The PPI deflation is expected to continue to narrow, driven by positive signs from global demand and firmer commodity prices.”
“We maintain our forecast for the 1Y loan prime rate (LPR) at 3.75% by end-2020 from current 3.85% but acknowledge that a further rate cut is looking less probable now as data points to sustained growth recovery in 3Q.”
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