Chinese inflation signals weak economy

Monday, 9 July 2012

Chinese inflation for June is out and posted another sharp decline to be just 2.2% year on year. The biggest falls were in the food category:

Meanwhile the PPI is looking a bit scary, accelerating its decline on the month and fully deflating at -2.1% year on year.

The declines are broad based. With especially large falls in the prices of Australia’s exports.

Overall the CPI is good news for Chinese authorities vis-a-vis stimulus. But the PPI is signalling nasty industrial weakness with no end in site.

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.