Keybridge China Inflation Momentum Monitor: August 2011
Index suggests that China inflationary momentum may be plateauing.
The Keybridge Research China Inflation Momentum Monitor held steady at +18.8 since last month, and the six-month moving average was also unchanged at +20.8. Demand, Business Activity, Money & Credit, and Global Factors all made positive contributions to the Index. Energy & Commodities made a negative contribution, and Consumer Activity was neutral. An important positive indicator, the Export Price Index is up 2.2% from last month, and 11.1% on the year.
The Index has also been recently buoyed by the late 2010 and early 2011 rise in the Reserve Requirement Ratio (“RRR”) for small/rural banks, the effects of such a rise typically last for 9-12 months. With the RRR holding steady at 18%, there appear to be diminished expectations that inflation will move above current levels. Overall, the Index suggests that inflationary momentum may be plateauing, but it is too early to tell if prices will begin to decelerate.
Note: Past editions of the China Inflation Momentum Monitor are published for illustrative purposes only. For more information on regular subscriptions, please contact Keybridge Research.
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