China: Inflation at its low - ANZ

Research Team at ANZ, notes that China’s headline inflation eased to 1.9% y/y driven by lower food prices.

Key Quotes

“Price pressures are biased higher with recent floods reportedly destroying about 295,200 hectares of crops across 11 provinces. This is likely to push vegetable and fruit prices higher in the coming months.

PPI’s are also biased higher due to the base effect of lower oil prices last July and August. A stabilisation in prices means the PBoC is expected to be less aggressive with monetary policy. This means fiscal policy will be back in the picture to help drive growth. It’s a similar situation across the Tasman with a liberal/national coalition being formed.”