China: CPI inflation stabilised at 2.5% in October - Nomura

China’s Consumer price index inflation stabilised at 2.5% y-o-y in October, unchanged from September, as the moderation of food price inflation – driven by falling vegetable prices – fully offset the rise in non-food price inflation, explains the research team at Nomura.

Key Quotes

“Producer price index (PPI) inflation fell further to 3.3% y-o-y from 3.6%, mainly due to a high base last year and the continued weakening of domestic demand.”

“We maintain our forecast for a mild rise in annual CPI inflation to 2.1% in 2018 from 1.6% in 2017 and believe contained inflation will not affect Beijing’s policy easing agenda.”

“We expect the downtrend in PPI inflation to continue in a milder manner through winter given a less severe anti-pollution campaign this year compared to last.”