China reverts to inflation exporter in November
Price increases in Asia´s largest economy accelerated in November, turning China back into a net exporter of deflation globally
China´s consumer price index advanced at a 2.3% year-on-year pace last month, as the cost of food rose more quickly, increasing at a 4.0% year-on-year clip versus 3.7% in the month before.
Non-food prices were also higher, rising at a 1.8% pace - a three-year high - versus the 1.7% clip seen in the more before.
However, it was factory gate prices which saw the largest increase, with the rate of prices increases jumping from 1.2% year-on-year in October to 3.3% (consensus: 2.3%).
Industrial commodity price inflation was the chief factor behind the rise in producer prices, driven by a surge in the cost of coal, Juian Evans-Pritchard, China economist at Capital Economics explained in a research note sent to clients.
"Stepping back, the big picture is that China’s stimulus driven recovery has stoked domestic price pressure this year, with the most rapid increases concentrated in property prices and industrial commodity prices. The increases in the latter are helping
to lift inflation globally," Evans Pritchard explained.
However, the research boutique´s projections called for that reflation to "run out of steam" in 2017 as the Asian giant´s economy slowed again.
Evans-Pritchard forecast called for producer prices to peak at about 5% in the first half of 2017 and to then edge lower afterwards. Consumer price pressures might also moderate slightly at the same time, the economist said.