China released its CPI and PPI for December over the weekend. The former is stable-ish at 1.6% while the latter is still sinking fast at -5.9%:
As is usual, the PPI is of greater relevance to Australia given it is the production side of the economy to which we are most clearly attached:
Check out extraction and raw materials, the two sub-components that matter most to Australia. This is the global commodity super cycle imploding in China. Of most interest going forward will be how long it will take the falling yuan to restore some pricing pressures in its extractive industries.
Or, put another way, how long will it take for China to successfully export this deflation to other commodity producers.
Or, put another way, how long it will take for China to put other commodity producers out of business instead of its own.
A falling yuan is not pretty for Australia.