Home›Forex›Major Pairs›China August inflation forecast to rebound, yuan focus…

China August inflation forecast to rebound, yuan focus on CPI and PPI

Forexlive says exports rose 25.0% year over year in August, adding a fresh backdrop for the CPI and PPI prints and how markets may price China growth and stimulus needs.

Reported · Written up by our desk · Major Pairs

China August inflation is forecast to rebound as traders look to upcoming CPI and PPI data for signals on domestic demand and how much deflation risk is easing, with the yuan seen as the currency most directly tied to the outcome. Forexlive expects headline CPI to rise to about 0.9% year over year from July’s 0.5% after a slide to a five month low, while producer prices are expected to firm toward roughly 3.2% year over year.

Forexlive attributes the projected CPI pickup largely to food price dynamics, including a recovery in pork and vegetable prices, plus firmer refined oil prices, rather than a broad based improvement in consumer demand. A rebound toward consensus is expected to ease immediate deflation concerns, but economists still view it as a near term bounce because the move is not expected to reflect genuine strength in consumption.

For markets, PPI is described as the more closely watched component for positioning around industrial demand, with a firmer print supporting the narrative that factory gate deflation is easing even as second round pass through to consumer prices remains weak. Forexlive also flags that expectations call for headline inflation to settle near 1% in September before easing again to around 0.8% in October, which would reinforce a gradual trend rather than a sustained shift.

The inflation release comes a day after customs data showed China trade performance strengthening in exports while imports softened, according to Forexlive. Exports are reported to have risen 25.0% year over year in August, up from 23.9% in July, and the report notes exports were driven by overseas demand for autos and high tech goods, a context that could influence how currency markets react to the inflation prints.

More like this

Sources