China’s Client Worth Index (CPI) turned mildly constructive in Jun after declining from Feb until Could. Headline CPI rose 0.1% y/y (Bloomberg est: -0.1%; Could: -0.1%). Core CPI (excluding meals & power) edged up barely to 0.7% y/y from 0.6% y/y in Could. The Nationwide Bureau of Statistics (NBS) attributed the rebound in CPI primarily to costs of commercial client items (-0.5% y/y; Could: -1.0%), which in flip was led by a smaller decline in power costs and improve in costs of gold and platinum jewellery, UOB Group’s economist Ho Woei Chen reviews.
Downward strain persists
“China’s Client Worth Index (CPI) turned mildly constructive in Jun at 0.1% y/y after declining from Feb until Could. This was attributed primarily to the rebound of commercial client items costs (-0.5% y/y; Could: -1.0%), which in flip was led by a smaller decline in power costs and improve in costs of gold and platinum jewellery.”
“Producer Worth Index (PPI) fell -3.6% y/y and -0.4% m/m in Jun. The continued development in sequential decline signifies a sustained downward trajectory. One of many causes cited was the slowdown in international commerce progress which depresses costs of some industries with a comparatively excessive export share.”
“In 1H25, headline and core CPI averaged -0.1% y/y and 0.4% y/y respectively whereas PPI averaged -2.8% y/y. Making an allowance for of 1H25 outturn and progress dangers, we revise decrease our forecasts for 2025 CPI to -0.2% (from 0.0%) and PPI to -2.7% (from -2.5%). For the financial coverage, we count on an extra 10-bps rate of interest minimize in 4Q25 with the 7-day reverse repo charge, 1Y LPR and 5Y LPR to finish the yr at 1.30%, 2.90% and three.40% respectively.”
