What Tonight's Chinese Inflation Data Will Tell Us About The Economy

Consumer and producer prices for November are out at 8:30 p.m. ET. Analysts polled by Bloomberg expect consumer prices to rise 2.1 percent, and producer prices to fall 2 percent.

Bank of America's Ting Lu expects consumer prices to rise 2.1 percent because of a lower year-over-year base against which it is being compared, and because of a recent uptick in food prices:

"By breakdown, we estimate MoM food inflation to rise to 0.3% from -0.8% in October on seasonally higher (just slightly higher) vegetable prices due to cold weather.

According to the Ministry of Commerce, wholesale average vegetable prices in the first three weeks of November increased by 4.5% after dropping 7.9% in October. Non-food prices could moderate to 0.1% MoM in November on fuel price cut effective from 16 Nov."

He expects producer prices to decline 1.8 percent on the year, and rise 0.1 percent on the month. Last month, SocGen's Wei Yao had said that rising PPI was a good sign for the manufacturing sector since it showed that the "sector is near the end of destocking and margin compression in this cycle."

In the past we had reported that the diverging consumer and producer prices had made the job of China's central bank much harder as it tried to fine tune monetary policy to bolster the economy.

But with the economy showing green shoots the People's Bank of China isn't expected to do much.



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