Bankinter: CPI (July):-0.3% year-on-year vs. -0.4% expected vs +0.0% previous. (ii) Industrial Prices: -4.4% year-on-year vs. -4.0% expected vs -5.4% previous.
Assessment: Both CPI and industrial prices mark deflation. The CPI fell -0.3% year-on-year, the first negative reading since February 2021, while industrial prices fell for the tenth consecutive month. This is the first time since November 2020 that both indicators have been negative.
After a positive post-pandemic start in Q1 2023, Chinese domestic demand is weakening, the real estate sector is facing solvency problems and exports are falling sharply. Fiscal and monetary measures are expected to revive the economy and return to positive inflation rates.
