China Economy Commodities Iron ore price

Here comes China’s inflation shock

Wednesday 9 November 2016

China’s inflation numbers are out and all about one thing: coal. CPI is in at 2.1% up from 1.9%. But the PPI is screaming higher as expected up 1.2% from 0.1% in September and the trajectory is a mirror image of coal:

On the price rises we’ve seen to date my rough projection is for this to run for another quarter:

That’s on price rises so far. I still think thermal coal is probably peaking. As well, power prices are regulated so they will not be passed on to households. But coking coal is still nuts, as well as iron ore and steel, and all three are central to the economic “recovery” such as it is.

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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.