Thursday, May 11, 2017

Producer Prices To Further Moderate

Economic Research
11 May 2017

Economic Update

China’s CPI was lifted by the narrowing moderation of food prices and growing non-food inflation in Apr 2017, while PPI dropped at a faster-than expect pace. Looking ahead, we believe that the CPI would move towards 2% YoY level in the coming months amid a rebound of food prices and more upside risks from non-food sectors. Meanwhile, PPI would continuously decline towards par level in the next couple of quarters given easing commodity prices, a high base effect and start of the destocking process in 3Q17. Policy-wise, we expect to see more regulatory storms on shadow banking and off-balance sheet assets, which are likely to result in tighter liquidity conditions and rising borrowing costs for both financial institutions and corporates.

Economist:  Zhang Fan| +8621 6288 9611 ext 105

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