CPI and PPI inflation in May
In May, the price index of the producers of PPI decreased to the lowest level since March 2016 (on a year-to-year basis). That's the eighth period in a row to drop this indicator.
The price index of production goods (PPI) – besides known as maker Price Index or production price inflation – is simply a measurement of the average price change of goods and services purchased by producers on the home market. The PPI is utilized as an inflation rate as it reflects production costs that can be passed on to consumers.
This is the consequence of a decline in planet natural materials prices, request for industrial products in the country and abroad and a advanced base from the erstwhile year.
Economists foretell that CPI inflation will stay low. This is due to the fact that request is inactive besides weak to stimulate supply, the global environment is complex and external consumption has weakened compared to the erstwhile year.
The CPI (consumer price index) is the index of the price change of consumer goods and services, at the same time the most popular inflation and deflation rate, calculated on the basis of the weighted average price of goods and services purchased by the average household.
In order for consumer goods and services prices to emergence again "at a healthy level" (approximately 2% y/o) there is simply a request for a combination of respective factors: an effective policy to stimulate home demand, an increase in economical activity, a gradual decline in unemployment, an increase in income, a strengthening of consumer assurance and a larger scope of scenarios to stimulate consumption.
Experts are convinced that PPI readings in the coming months will inactive indicate deflation. But with the weakening of the advanced base effect in the second half of this year, a possible improvement in the economical situation will consequence in an increase in request for natural materials and industrial products. So the PPI should start to grow. The increase in PPI is expected to be around 1% (r/r) throughout this year.
The Chinese economy grew faster than expected in the first 4th of this year, but fresh data showed that the activity of the local factories decreased and the results of abroad trade (especially imports) fell in May.
Will the Chinese central bank reduce interest rates or introduce more money into the financial strategy to sustain economical recovery?
Data: State Statistical Office (chin. 国家统计局)
Source:
Foreign trade in May
May data on abroad trade in China is worrying. June data will indicate (with large probability) what trends will prevail in this branch of the Chinese economy in the second half of this year.
Data: General Customs Administration of China (chin. 中国海关总署)
The problem is trade with the United States. In May, they fell by 15.5% y/y and in 5 months this year by 5.5% y/y (counted in RMB). Exports to the USA decreased by 15.1% in May per USD. The share of trade with the United States in full of Chinese abroad trade turnover falls significantly.
The exchange rate of RMB to USD is crucial for assessing the state of Chinese abroad trade. For respective months now, RMB has been weakening against the US dollar. The current rate exceeded 7.1 RMB / 1 USD erstwhile last year it oscillated between 6.6 and 6.8 RMB per dollar.
In May the country's trade turnover decreased by 6.2% y/y, including
- exports by 7.5% y/y
- import by 4.5%.
In the period January – May, exports in the USD increased by 0.3% (year/year) erstwhile full turnover decreased by 2.8% y/year and imports by 6.7% y/year.
A surprise is the decrease in the volume of exports (recalculated in USD) to ASEAN countries, China's largest trading partner. It stood at 15.9% y/y and is the first fall recorded since May 2020.
Data: General Customs Administration of China (chin. 中国海关总署)
China's trade turnover with Russia reached a evidence level of USD 20.57 billion in May (about PLN 85.38 billion). Chinese imports from Russia were worth USD 11.31 billion (about PLN 47 billion) and exports to Russia were USD 9.27 billion (about PLN 38.46).
Between January and May this year, the common trade between the 2 countries amounted to USD 93.81 billion (about PLN 389.26 billion), which gives an increase of 40.7% y/y. Chinese exports to Russia amounted to $42.95 billion (about PLN 178.23 billion) – an increase of 75.6% y/y, while imports from Russia were worth $50.86 billion (about PLN 211.06 billion) – an increase of 20.4% y/y.
China is presently Russia's largest trading partner.
Trade between both countries reached a evidence level of USD 190 billion last year (approximately PLN 792,08 billion). By the end of 2023 it would surely exceed the value of USD 200 billion (about PLN 830 billion), which was originally assumed in 2024.
The share of private companies in sales in Chinese abroad trade between January and May was 52.8%. Exports of highly processed goods like machinery and equipment, electrical, electronic and electrical products are growing. This kind of goods account for 57.9% of Chinese exports.
The different dynamics is shown by the export of cars, which reached a evidence increase of 124.1% in January-May. In the same period, imports of natural materials (oil, gas, iron ore, coal and soya) are decreasing.
According to the data of the General Customs Administration of China (中国海关总署) during the mentioned period (I-V 2023), over 70% of the turnover in abroad trade of the entity from GuangDong, JiangSu, Zhejiang, ShanDong, Shanghai and Beijing provinces.
Source:
Author: 梁安基 Andrzej Z. Liang, 上海 Shanghai, 中国 China
Email: [email protected]
Editorial: Leszek B.
Email: [email protected]
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