Bloomberg have a round up of some analyst reactions to the Chinese inflation data today (here and here). Here goes:
ANZ cut their CPI forecast for 2014 to 2.0% from 2.2-2.3% previously. they say:
- Deceleration of CPI inflation is largely due to surprisingly low food prices during Mid-Autumn Festival and before National Day holidays
- Anti-graft campaign could have significantly eased upward pressures on prices
- PPI suggest profit margin of Chinese corporates will be further squeezed and their capex demand will remain weak in next few quarters
Credit Agricole CIB:
- CPI data show that domestic demand is weakening
- Economy remains slowing
- Beijing should begin to be concerned that global disinflationary pressures are spreading to China
- Low inflation readings will open door to further targeted monetary and fiscal easing
Capital Economics
- May cause some to worry about deflation risks, doesn’t see major cause for concern
- Firms are mostly just passing on lower industrial input costs, which have resulted from falling commodity prices, rather than slashing their profit margins in response to weak demand
- Expects inflation to edge up again over coming quarters on falling pig stocks
Better than flying pigs, I suppose
CBA:
- Softer September CPI headline data are entirely a base effect as consumer prices rose 0.5% m/m from August
- PBOC have “very little appetite for further monetary stimulus at this point”
- Any support for AUD from expected easing steps is likely to subside quickly
