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