China: Consumer prices rose 1.8% in the year through July - BBH

Research Team at BBH, notes that the economic feature of the today’s session was the Chinese inflation data wherein the consumer prices rose 1.8% in the year through July.  

Key Quotes

“This was in line with expectations and down from 1.9% in June.  Last July it stood at 1.6%.  Food prices rose 3.3%, while non-food prices rose 1.4%.  Urban inflation was slightly faster than rural consumer inflation (1.8% vs. 1.5%).  

Producer prices moderated more than anticipated.  The -2.6% year-over-year decline in June eased to -1.7% in July.  It is the least negative report since August 2014.  Some Chinese economists are now expecting PPI to turn positive before the end of the year.  

Chinese stocks appeared to like the news and extended yesterday's gains.  The Shanghai Composite rose in five of the last six sessions.  However, the easing of producer price deflation did not stop the bond market rally in China.  The 10-year yield is at its lowest level (2.75%) since early 2009.  Meanwhile, the dollar is trading in narrow ranges against the yuan for the second consecutive session, just below the 20-day average (CNY6.6670).”