China CPI arrives in line at +0.9%, AUD/USD a touch firmer

Chinese Consumer Price Index has arrived as follows:

China CPI

• China Feb CPI +0.9% YoY (vs. a Reuters poll +0.9%).

AUD/USD is holding in positive territory, trading 0.12% higher near 0.7270 at the time of the release. 

Seasonals are unfavourable in Feb resulting in an increase in inflation pressures, but this should be counterbalanced by a sizeable drop in pork prices and a high base in February last year. A decline in industrial commodity prices and PMI input prices suggests a further moderation in PPI in Feb though we note that bulks, steel and oil prices have continued to rise.

About Chinese CPI

The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index. The purchase power of the CNY is dragged down by inflation.

The CPI is a key indicator to measure inflation and changes in purchasing trends. A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the CNY.