China: Deflation threat off the radar - TDS

Research Team at TDS, notes that China’s deflation threat off the radar for now with data released over the weekend showing the decline in PPI to be the smallest since late 2014 at –2.6%/yr vs –2.8%/yr the prior month.  

Key Quotes

“Meanwhile headline CPI rose +1.9%/yr from +2% prior due to a sharp fall in  vegetable prices. Looking ahead, the less soft PPI should be positive for corporate profits, while food inflation is expected to bounce given recent extreme weather, which should see CPI in July and August edge above 2%.”