Poll-China 2025 consumer inflation forecast at 0.1% (vs 0.4% in April poll), 2026 inflation expected at 1.0%

Poll-China 2025 consumer inflation forecast at 0.1% (vs 0.4% in April poll), 2026 inflation expected at 1.0%

China's producer prices have continued their downward trend, marking the 23rd consecutive month of deflation. The latest data shows a 1.8% year-over-year (yoy) decline in producer prices in August 2024, exceeding market forecasts of a 1.4% fall. This is the highest figure since April, driven by persistently weak domestic demand and decreasing global commodity prices [1].

The decline in producer prices was primarily driven by a 2.0% decrease in the cost of means of production, with processing and raw materials contributing significantly to this drop. Consumer goods prices also fell further, with food, durable goods, and clothing prices all declining. Monthly producer prices fell by 0.7%, the fastest pace in 14 months [1].

In a separate development, the People's Bank of China (PBoC) has rolled out a swap facility to support equities and extended the use of ultra-long bonds to boost local growth. This move comes as China's 10-year bond yield rises, signaling more stimulus is on the horizon [2].

Meanwhile, consumer inflation expectations in China have been revised downward. According to a recent poll, consumer inflation is forecasted to be 0.1% in 2025, down from 0.4% in April. For 2026, the forecast is 1.0%, indicating a more subdued inflation outlook [1].

These developments suggest a continued focus on stimulating economic growth and managing inflation in China. Investors and financial professionals should monitor these trends closely, as they may influence market sentiment and investment strategies.

References:
[1] https://seekingalpha.com/article/4799921-wall-street-lunch
[2] https://tradingeconomics.com/china/producer-prices-change