Inflation Levels Are Sluggish in China: Is More Easing Required?



Chinese inflation is at the slowest level in six months

Inflation levels in China eased more in June. They grew at the slowest pace since January at 1.9% on an annual basis. Consumer prices had risen by 2.0% in May and were expected to rise by 1.8%. On a monthly basis, consumer prices declined in by 0.1% in June—compared to a fall of 0.5% in May and expectations of a decline of 0.3%. Producer prices fell by 2.6% in June—compared to a 2.8% fall in May and estimated forecasts of a 2.5% fall.

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PBOC might ease more as outflows rise in the last week

Previously, the PBOC (People’s Bank of China) eased the monetary policy in October last year. There are speculations that the central bank might ease the policy more as data suggest huge outflows from the financial system in the last week, while concerns remain about the United Kingdom’s exit from the European Union. With GDP figures expected next week, the PBOC might want to cut lenders’ reserve ratio.

Chinese indices rise on Friday

Chinese ETFs had been trading higher on Friday. The iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) increased by 2.2% and 1.5% at the end of the day on July 8. The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) was trading higher by 0.63%. The SPDR S&P Emerging Asia Pacific ETF (GMF) rose by 1.5%, while the iShares MSCI Emerging Markets ETF (EEM) rose by 2.2% on Friday.


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