China’s December inflation remained soft, PPI continued to slide

By FXStreet FXStreet (Mumbai) – China’s consumer inflation moved up slightly year on year in December. The National Bureau of Statistics on Saturday reported inflation in China came in at 1.6 per cent in December, matching estimates and up from November’s 1.5 per cent. The producer price index (PPI) however continued to fall. The PPI for December stayed unchanged at -5.9 per cent in December, declining for the 46th straight month. The PBoC estimates China’s consumer price index to climb 1.7 per cent in 2016. The PPI, according to the central bank will continue to slide and fall 1.8 per cent year-on-year, the central bank said in a working paper last month.

The weak fundamental signify the deflationary pressure building up and highlights the agony of the Chinese manufacturers. Zhou Hao, economist at Commerzbank in Singapore feels given the slowing economy, “Chinese companies will have to reduce their debt as further expansion in many industries will only lead to more loss.”

The manufacturing PMI for December has also been dismal. The Caixin PMI data which focuses on smaller and medium-sized companies showed manufacturing PMI fell to 48.2 in December, down from 48.6 registered in November. The official PMI figure though a little better than …read more

Source:: FX Street