In China, the world’s second-largest economy, consumer inflation accelerated in December due to rising food prices, while producer prices fell.
While consumer inflation in China accelerated somewhat in December, the decline in producer inflation remained below analyst expectations.
According to the data released this morning, the consumer price index increased by 1.8 percent annually, in line with expectations, and was above the November data, which rose 1.6 percent. The producer price index, which fell 1.3 percent annually in November, was expected to decrease by 0.1 percent.
However, the decrease in PPI was 0.7 percent. Although the announcement of a reduction in producer prices above expectations reflected the harmful effects of the increasing Kovid-19 cases on production, the decrease in price compared to the previous month was considered relatively positive.
“China’s producer deflation is declining – not as fast as we expected, but the trend is clear,” said Eric Zhu, Economist at Bloomberg Economics. The deceleration of the decline in PPI showed that upward pressure on ex-factory prices began to emerge.
On the other hand, according to Jeff Currie, Global Commodities Director at Goldman Sachs, the direction of commodity prices, especially oil, will depend on the reopening process after China’s new lunar calendar celebrations later this month. Currie said that if China and other Asian economies fully lift coronavirus restrictions and reopen, Brent oil could reach $110 a barrel in the third quarter.