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🇨🇳❗️Cable FX Macro Weekly Note: China January Inflation

**As seen in Risk In The Week report 02/02/24, subscribe at

China December consumer prices fell by 0.3% Y/y, this was slightly less than the prior decline of 0.5% and the consensus of 0.4%. The producer price measure printed down 2.7% Y/y, which was lower than what the consensus had seen. Rural prices declined more than the urban gauge at 0.5% and 0.3%, respectively. The deflationary batch was seen in goods prices as the metric posted a decline of 1.1% Y/y, and services rose by 1.0%. A divergence between services and goods prices sits in line with the trend seen over the past year.

The domestic demand picture remains fragile, price data confirms softness from both consumers and producers as markets continue to expect further support from Chinese authorities. The deks at OCBC remain cautious as they said policymakers risk doing too little, too late. They added that the absence of a continuation of new measures will add to negative sentiment. J.P. Morgan analysts said that the latest policy support measures on domestic industrial and consumer demand will take time to feed through, they expect China producer prices to stay in moderate annual deflationary prints through most of 1H24.



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