Inflation Eased In December, Likely Move Higher In 2017 But Manageable

Economic Research	11 January 2017
China
Economic Update
Inflation Eased In December, Likely Move Higher In 2017 But Manageable China’s CPI eased in Dec 2016 due to a high base effect, while PPI growth trended up due to the low base effect and high commodity prices. Looking into 2017, we expect a modest increase in CPI, underpinned by non-food inflation and a rebound of pork price in late 2017. For PPI, the growth would likely peak in 1Q17, as the low base effect ought to fade away from 2Q17 and restocking process to likely end in 1H17. On the policy front, the Government would likely focus more on measures to control financial risks and curb asset bubbles. Given the slowdown in property and automobile sales, infrastructure investment would be the priority to sustain economic growth. Economist:  Zhang Fan| +8621 6288 9611 ext 105
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