Home / News / China inflation rebounds on energy costs, but the demand story hasn't changed - recap
China inflation rebounds on energy costs, but the demand story hasn't changed - recap
<p dir="ltr">Both readings landing in line with or above forecast removes the immediate deflation-scare risk that was in play after July's shortfall, but the composition of the beat matters more than the headline. NBS attributing the CPI rebound to rising energy prices rather than a broad pickup in consumption keeps the underlying demand story unchanged from the preview: this looks like a cost-side rebound layered on top of the same soft consumption picture flagged by yesterday's import miss and the still-contractionary services PMI. The PPI beat is the more constructive leg for traders watching industrial demand, since factory-gate deflation easing faster than expected supports the case that the manufacturing recovery signalled by the private PMI gauge has some pricing power behind it. Overall, this is unlikely to shift the broader policy debate materially, since the rebound is being read by economists as consistent with, not a reversal of, the domestic demand weakness Beijing is already trying to address.</p><p dir="ltr"></p><p dir="ltr">
China's inflation data beat forecasts in August, but the rebound looks like a cost-side story rather than a genuine turn in domestic demand.</p><p dir="ltr">Summary:</p><ul dir="ltr"><li><a href="https://investinglive.com/news/china-august-cpi-y-y-expected-0-8-prior-0-5/" rel="follow">August CPI rose 0.8%</a> y/y, matching consensus and up from July's 0.5%; on a monthly basis CPI rose 0.4%, ahead of the 0.3% forecast and a reversal from Ju
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<p dir="ltr">Both readings landing in line with or above forecast removes the immediate deflation-scare risk that was in play after July's shortfall, but the composition of the beat matters more than the headline. NBS attributing the CPI rebound to rising energy prices rather than a broad pickup in consumption keeps the underlying demand story unchanged from the preview: this looks like a cost-side rebound layered on top of the same soft consumption picture flagged by yesterday's import miss and the still-contractionary services PMI. The PPI beat is the more constructive leg for traders watching industrial demand, since factory-gate deflation easing faster than expected supports the case that the manufacturing recovery signalled by the private PMI gauge has some pricing power behind it. Overall, this is unlikely to shift the broader policy debate materially, since the rebound is being read by economists as consistent with, not a reversal of, the domestic demand weakness Beijing is already trying to address.</p><p dir="ltr"></p><p dir="ltr">
China's inflation data beat forecasts in August, but the rebound looks like a cost-side story rather than a genuine turn in domestic demand.</p><p dir="ltr">Summary:</p><ul dir="ltr"><li><a href="https://investinglive.com/news/china-august-cpi-y-y-expected-0-8-prior-0-5/" rel="follow">August CPI rose 0.8%</a> y/y, matching consensus and up from July's 0.5%; on a monthly basis CPI rose 0.4%, ahead of the 0.3% forecast and a reversal from Ju
