China CPI to inch up but PPI to fall further

China's CPI to inch higher to 1.5% yoy in March from 1.4% yoy in February, says Societe Generale. This implies a normal seasonal pattern of a -0.4% mom rate. Specifically, food inflation likely reversed three-quarters of the 2% mom gain during the month of the Chinese New Year holiday, but the yoy rate should have climbed marginally higher from 2.4% to 2.6%. 

Housing CPI inflation is expected to cool down further from 0.8% yoy in February to 0.7% yoy, as the property sector was still undergoing corrections. Other nonfood inflation is expected to have normalised somewhat lower in mom terms as well, but the 7% hike in retail fuel prices implemented on 28 February probably offset part of the seasonal disinflation, according to Societe Generale.

On the contrary, PPI is expected to have fallen further to -5.1% yoy from -4.8% yoy in the previous month. The input price index in the official manufacturing PMI report improved albeit still suggesting a deep contraction (45). That level is consistent with a 0.6% mom contraction of the PPI.