China CPI inflation should continue to recover in the coming months

China consumer price inflation edged up, from 1.4% y/y in March to 1.5% last month, according to data published on Saturday. This was weaker than most had anticipated, but still brought the headline rate to its highest level this year. 

CPI inflation should continue to recover in coming months, helped by a rebound in oil prices and higher housing cost inflation. 

Meanwhile, producer price inflation remained unchanged in April at -4.6% y/y, but appears to be bottoming out and should rise in the second half of the year as commodity prices recover. These trends should ease concerns over deflation.