China consumer price pressures on the rise while producer prices in deeper contraction

Stronger food price inflation will have been the main driver of China's CPI. Wholesale food prices rose for the first month in four months in June by 1.7% mom while food CPI narrowed its sequential decline from 0.9% to 0.1%. 

"China CPI inflation is expected to strengthen further to 1.6% yoy in July from 1.4% yoy in June", says Societe Generale. 

Wholesale food prices continued to have increased over July by another 1% mom, which is likely to have driven food CPI up.  Administrated fuel prices have been lowered by roughly 3% in July.

"Given a minor base effect, food CPI inflation is expected to have strengthened for the second consecutive month to 3% yoy in July from 1.9% yoy in June, raising the headline CPI figure by 0.3pp. Housing CPI inflation is also expected to have remained on its uptrend, in line with the revival of housing demand data. The softer energy costs are expected to lower headline CPI inflation by 0.1pp", added Societe Generale.