Chinese inflation shows growth intact (members)

China released its July inflation data over the weekend and it was bang on consensus at 2.3% for the consumer price index (CPI) and -.09% for the producer price index (PPI):

I am always far more interested in the PPI. It is of much greater use for gauging the state of the industrial economy upon which Australia’s exports hang. Indeed, its second derivative changes (that is changes in the rate change) have proven to be a very useful leading indicators for commodity demand for the past three years.

So, the news for July was good. The PPI is still improving year on year, though month-on-month gains are starting to flatten out. My expectation is that by October we will see it rollover over again, presaging the waning of mini-stimulus efficacy (and growth) into new year.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.