Chinese Cpi Cools Down

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Chinese Cpi Cools Down

Chinese Cpi Cools Down

Chinese CPI cooled down during September, which was a surprise for everyone. During the month, private spending took a hit while the PPI also took a turn for the worse.

The current inflation situation in China has once again highlighted the need for an additional stimulus package from the authorities.

Chinese Cpi For September Was 0.4% Y/Y

According to the data, the CPI jumped 0.4% y/y during September, which was a lot lower than August's reading of 0.6%. On a m/m basis, the CPI inflation also missed the forecast of 0.4%.

Overall, the data shows that personal consumption in China is still weak despite all the stimulus packages. At the same time, the economic conditions have also subdued the domestic demand in the country.

Meanwhile, the domestic investment has gone into the excessive category which is a major reason behind the current deflationary trend.

Another big surprise in September was the Producer Price Index (PPI) which declined by 2.8% y/y. This was below the forecast of 2.5% and a lot worse than the last reading of 1.8%.

Overall, the PPI reading continues to show a decline for almost 2 years in a row amid sluggish activity and weak demand.

There's no doubt that the inflation report shows that the 2nd largest economy in the world is struggling to get out of sustained weakness. A day ago, the Finance Minister of China announced the future fiscal stimulus plans, which were disappointing at best.

According to the Finance Minister, they are planning counter-cyclical measures to ensure that the economy props higher.

In September, China announced a rather aggressive stimulus package which also included rate cuts. However, investors believe that China needs to announce a more targeted plan that can put an end to the deflationary trend.

This weakness in the Chinese economy has also translated into weakness for the global oil prices.

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