Low inflation to persist in China until oil prices reverse quickly
10 February 2015, 13:17
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Tim Condon of ING, revises the 2015 Chinese inflation forecast to 1.0% from previous 2.0%, after food components drove January CPI to levels not seen since November 2009.
Key Quotes
“CPI inflation slowed to 0.8% in January from 1.5% in December. The consensus forecast was 1.0%. Inflation was the lowest since November 2009 when the economy was emerging from the brief bout of deflation triggered by the GFC.”
“The food and transport components were the sources of disinflation.”
“The PPI fell by 4.3% YoY, led lower by a 8.6% fall in the raw materials component.”
“We revised our 2015 inflation forecast 1.0% from 2.0% and we think the 1.8% consensus forecast is heading lower.”
“Low inflation will persist unless the 2H14 oil price crash quickly reverses (ING forecasts the global oil price at $85 in 4Q15).”
“We think the risk to spending from elevated real interest rates (second figure) argues for increased PBoC accommodation and we are reviewing our forecast, which is the same as the Bloomberg median forecast, of only one 25bp policy interest rate cut this year for upward revision.”
Key Quotes
“CPI inflation slowed to 0.8% in January from 1.5% in December. The consensus forecast was 1.0%. Inflation was the lowest since November 2009 when the economy was emerging from the brief bout of deflation triggered by the GFC.”
“The food and transport components were the sources of disinflation.”
“The PPI fell by 4.3% YoY, led lower by a 8.6% fall in the raw materials component.”
“We revised our 2015 inflation forecast 1.0% from 2.0% and we think the 1.8% consensus forecast is heading lower.”
“Low inflation will persist unless the 2H14 oil price crash quickly reverses (ING forecasts the global oil price at $85 in 4Q15).”
“We think the risk to spending from elevated real interest rates (second figure) argues for increased PBoC accommodation and we are reviewing our forecast, which is the same as the Bloomberg median forecast, of only one 25bp policy interest rate cut this year for upward revision.”
