China's Consumer Inflation rose driven by solid market demand throughout November. China's PPI data eased slightly, but still held near multi-year record highs.
On Thursday (09/December), China's National Bureau of Statistics released data on Consumer Inflation which increased 2.3 percent year-over-year in November. This figure is a significant increase from 1.5 percent growth in October, but slightly below economists' expectations of a 2.5 percent increase.
On a monthly basis (MoM), China's CPI rose 0.4 percent, slowing from 0.7 percent growth in the previous period, but better than forecasts for a 0.3 percent increase.
The increase in China's consumer inflation was largely driven by manufacturers' steps to increase selling prices amid rising production costs. In addition, solid domestic market demand towards the end of the year helped lift the inflation trend.
For information, China's consumer inflation tends to slow down in the previous few months due to weak demand. In this regard, the Chinese government has lowered its CPI target this year from 3.5 percent to 3.0 percent. However, the trend of Chinese consumer inflation is now starting to lift along with the recovery of consumer optimism towards the end of the year.
China's PPI Still Stable
In a separate release, Producer Inflation (PPI) data was reported to be perched at 12.9 percent on an annual basis, down from 13.5 percent, but still above expectations of a 12.4 percent decline.
The weakening of commodity prices such as crude oil to coal in the last few weeks played an important role in the decline in the PPI this time. However, from a broader perspective, China's producer inflation trend is still very high. This is inseparable from the problem of global supply chain congestion and the spike in commodity prices on international markets since the beginning of the year.
China's relatively high producer inflation has left the market worried about stagflation, a condition in which high inflation is not followed by economic growth. In response to this, the Chinese government on Monday announced it had cut the reserve requirement ratio of commercial banking by 0.5 percent and injected 1.2 trillion yuan in liquidity.
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