10.07.24
China consumer inflation edged up in June by 0.2% over the year missing expectations of 0.4% rise.
Over four months since October 2023 CPI has been in negative territory but quickly shot up to +0.7% in February 2024. However, for the next four months it have been demonstrating weak performance sticking to 0.1-0.3 range.
At the same time producer prices have been creeping below zero level since October 2022 as factories tried to rid of excessive inventories because of overproduction.
Inflation easing began in 2020 on the back of pandemic as consumers started contract their spending. Situation worsened because of the property crisis in 2022 and there are still no signs of recovery in consumers activity.
Extremely low rates of inflation pose deflationary risks to the economy which police makers will try to avoid by all available means.
A range of stimulus measures have been introduced by the government to revive consumption in recent years, however, with no visible success.
Market hopes further stimuluses to be announced in the middle of July when major official gathering is scheduled to take place.
Any easing of the monetary policy will be pressuring the value of CNY which is already stays near record lows.