China’s CPI inflation likely accelerated further in September

China’s producer price index is likely to have stopped contracting for the first time in 55 months in September. Meanwhile, the nations consumer price index is expected to have increased to 1.6 percent year-on-year from 1.3 percent year-on-year in the month, in the midst of recovering food price inflation, stated Societe Generale in a research report.

In September, wholesale prices of agricultural products rose over 3 percent, as compared with the 1.6 percent sequential contraction in last September. This indicates towards a marked rise in CPI food inflation from the unexpected low print of 1.3 percent year-on-year in August.

In the meantime, non-food inflation is expected to have risen as well. The quick increase in prices of property in major cities has begun putting upward pressure on rental prices, and the base effect from stabilizing oil prices is gradually kicking in as well, said Societe Generale.

The official manufacturing PMI report indicates the input price index rising for a third straight month in September to 57.4 from 57.2 in the prior month. This should show additional sequential rise in the PPI. Therefore, along with favorable base effects, the contraction in annual inflation might finally come to an end after four-and-a-half years, noted Societe Generale.