RHB | China | Mild Inflationary Pressure And Monetary Easing To Continue

Economic Research	11 April 2016
China
Economic Highlights
Mild Inflationary Pressure And Monetary Easing To Continue CPI stayed unchanged, while PPI beat expectation in Mar 2016 due to rising commodity prices. Unfavourable weather conditions and shortage of hog supply were major reasons to push up food price and resulted in relatively high CPI readings in recent months. Looking forward, we believe inflationary reading will peak in 2Q16 and then gradually move downwards due to rising comparable base and growing supply. We revise up our CPI forecast to 2.4% in 2016, from previous projection of 2.1%, given unexpected growing food price after the Lunar New Year. But this mild inflation is unlikely to change government’s easing stance. We still believe monetary authority is likely to lower RRR soon given softened USD in the last couple of weeks. Economist:  Zhang Fan| +8621 6288 9611 ext 105
To access our recent reports please click on the links below: 01 Apr: Improvement Unlikely To Be Sustainable Due To Structural Problem 08 Mar: China Foreign Trade Tumbles On Waning Demand 07 Mar: A Slower Growth With More Help From Active Fiscal Policies 01 Mar: Industrial Sector Has Yet To Reach Bottom 01 Mar: 50bps RRR Cut Still Not Enough 24 Feb: Setting A Slower Growth Target