Watch if Chinese PPI feeds into U.S. CPI

Whether it’s ‘year on year’ or from last month, Chinese PPI rose more notably during March 2021, while its CPI was subdued.

https://www.scmp.com/economy/china-economy/article/3128852/china-inflation-factory-gate-prices-jump-again-march

China’s official producer price index (PPI) rose to 4.4 per cent in March compared with 1.7 per cent in February while;

China’s consumer price index (CPI) rose to plus 0.4 per cent in March compared to minus 0.2 per cent in February.

Is there difficulty in passing on price rises?

It’ll be more relevant to watch China’s April CPI to see if there is a lag or….it could also be a case of consumers are choosing to not consume and pay the higher prices ?

I found this quote from another source relevant;

“Our research has found that China’s PPI has a high positive correlation with CPI in the U.S.,” said Raymond Yeung, chief economist for Greater China at Australia and New Zealand Banking Group Ltd. “The higher-than-expected PPI data could impact people’s judgment of inflation pressure in the U.S. and globally, and this impact shouldn’t be underestimated.”

April 13, 2021

by Rob Zdravevski

rob@karriasset.com.au

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