Slower China's inflation rate suggests "lukewarm" domestic demand

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Tuesday, Jun 09 2015

China's consumer price inflation (CPI) rose 1.2% in May from the year-earlier period, slightly below the 1.3% forecast and below the 1.5% rise in April. Pork prices rose 5.3% on-year in May, slower than April's 8.3% on-year rise, he noted, calling it one of China inflations "key swing factors." Overall, food prices in May rose 1.6% from the year-ago period. A sharp fall in pig numbers in recent months will likely put upward pressure on pork price inflation, some believe.

Producer prices in May fell 4.6% from a year earlier; it had been expected to slide 4.5% in May. Producer prices eased 4.6% in April. "Further monetary policy easing is highly needed," ANZ said in a note Tuesday, noting that the slower CPI inflation rate suggests "lukewarm" domestic demand. It cut its CPI inflation forecast to 1.5% for 2015 from 1.8% previously. ANZ expects PPI will remain in negative territory.

After the data, Aussie was initially pushed lower, but immediately rebounded, currently being traded few points below 0.77 handle. Pair is likely to find support around 0.7650 level and resistance above 0.7750 area. Later today, in the US session, JOLTS Job Openings figures are scheduled for a release.

More in this category: « ANZ Job Advertisements unchanged in May UK Trade Balance deficit narrowed in April »

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