OPINION
Market Rating Before FOMC MeetingJan 31
Price pressures are easing in the Largest Exporter in the World
According to data released today by the National Bureau of Statistics of China (NBoSC), consumer price index declined by 0.3 percent on monthly basis in December and it was registered as 1.5 percent, below projections of 1.8 percent, year-over-year.
In the same period, producer price index declined by 3.6 percent on annual basis, yet it was registered as 10.3 percent despite the projections of 11.1.
0.8 point drop in December in consumer inflation, which recorded the highest increase in 15 months with 2.3 percent in November, was the result of the ease in food, energy and housing prices.
On the other hand, the main factor of the 2.6-point decrease in the producer inflation, which reached its highest level in 26 years with 13.5 percent in October and decreased to 12.9 in November, was the decline in commodities, especially crude oil, in international markets, and the steps taken by the Chinese government regarding raw material costs.
At this point, the difference between PPI and CPI, which reached 12 bps in October, had an upward effect on global imported goods prices, especially in the USA, which is the largest importer from China. However, the decline in the last two months indicates that the price pressures in the global supply chain left their peak behind. Of course, short-term pullbacks are unlikely to be severe, as the delayed effects and supply bottlenecks caused by the pandemic have not yet ceased to contribute to global inflation.
In the same period, producer price index declined by 3.6 percent on annual basis, yet it was registered as 10.3 percent despite the projections of 11.1.
0.8 point drop in December in consumer inflation, which recorded the highest increase in 15 months with 2.3 percent in November, was the result of the ease in food, energy and housing prices.
On the other hand, the main factor of the 2.6-point decrease in the producer inflation, which reached its highest level in 26 years with 13.5 percent in October and decreased to 12.9 in November, was the decline in commodities, especially crude oil, in international markets, and the steps taken by the Chinese government regarding raw material costs.
At this point, the difference between PPI and CPI, which reached 12 bps in October, had an upward effect on global imported goods prices, especially in the USA, which is the largest importer from China. However, the decline in the last two months indicates that the price pressures in the global supply chain left their peak behind. Of course, short-term pullbacks are unlikely to be severe, as the delayed effects and supply bottlenecks caused by the pandemic have not yet ceased to contribute to global inflation.
