🇨🇳❗️Cable FX Macro Weekly Note: China October Consumer Prices

**As seen in Risk In The Week report 11/03/23, subscribe at cablefxm.co.uk/reports

China consumer prices showed a persistent deflationary trend as the September rate eased to flat from a prior +0.1% Y/y, this missed economists forecasts of 0.1%. Muted prices have been present for most of 2023, for perspective, the headline CPI figure ticked at 2.80% a year ago. Food prices extended lower as they deflated by 3.2% Y/y from the prior -1.7%, consumer goods inflation fell 0.9% from the prior -0.7%, while services and core prices were steady at 1.3% and 0.8%, respectively. Producer prices stabilized to -2.5% Y/y from the prior -3.0%, all subcomponents remain in deflation except clothing and daily-use articles. Despite the weakness seen in the yuan since Q2, there is no evidence of inflation passing through. Economists expect prices to stay subdued for the rest of the year, the 2023 CPI forecast is penciled at 0.5%, and inflation is seen rising to 1.8% next year. Analysts expect the PBoC to cut RRR further in 4Q to help the rise in government bond issuance, other policy measures have been laid since August to support the economy and the headwinds faced by the property developer sector. Further declines in house prices might keep consumer sentiment in check.