China’s PPI seems to have further accelerated sharply in January; CPI inflation likely rebounded to 2.3 pct

China’s producer price index is likely to have further risen sharply in January. According to a Societe Generale research report, Chinese PPI index is expected to have further risen to 7 percent year-on-year in January from December’s 5.5 percent year-on-year. The base effect is anticipated to have contributed 1 percentage points in the midst of the record low oil prices in January 2016.

Moreover, the input price index in the official reports dropped in January to 64.5 from the 70-month high of 69.6. But the January’s print is still an elevated level. This appears to indicate towards a smaller sequential gain of 0.8 percent to 0.9 percent.

Meanwhile, China’s consumer price inflation is expected to have recovered to 2.3 percent year-on-year from 2.1 percent. Prices of food were up over the month, although not faster than January 2016. But non-food inflation is expected to have driven the pick-up.

Housing inflation in China is expected to have accelerated further in January to 2.2 percent year-on-year from 2.1 percent year-on-year in December, noted Societe Generale. This might be the most rapid pace in 31 months. Fuel inflation is also likely to have accelerated considerably on a positive base effect.