China’s one-trick inflation pony is out of puff

Wednesday 12 April 2017

Chinese inflation data is out for March and is a problem. The CPI was weak again at just 0.9% year on year while the runaway PPI fell a little to 7.6%:

The issue is that the Chinese input into the global reflation rally is remarkably narrow and is about to fade away fast. The CPI is tumbling thanks to food prices:

And the PPI is basically just oil plus steel and inputs:

Oil will be flat year on year by June and the ferrous complex is collapsing before our very eyes.

China’s false reflation signal is about to implode.

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.