CPI to decrease further, PPI to rebound: research

16  January 2013

China’s consumer price inflation is expected to decrease to 1.7 percent year-on-year in October, from 1.9 percent in September and 2 percent in August, investment bank Societe Generale said in research note on Monday.

The forecasted drop is mainly due to decreases in vegetable prices, the note said. Food inflation is likely to fall to 2 percent from 2.5 percent in the previous month, thus easing the headline inflation.

Non-food components of the index probably remained largely stable in September, with the easing of services-related inflation offsetting a small rise in housing inflation, according to the research note.

SG also expects China’s industrial production growth to show another uptick in October, rising to 9.4 percent year-on-year from 9.1 percent in September, echoing the continued improvement in the latest PMI reports.

Like in September, the recovery is expected to be mostly driven by infrastructure investment, especially in transportation, the note said.