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China Consumer Prices Jump, Credit Slows on New Year Shutdown

  • CPI jumps to highest since 2013; PPI slows for fourth month
  • Aggregate financing slumps on seasonal effect, M2 ticks up
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Bank of America Merrill Lynch’s Helen Qiao discusses China’s CPI data and what it means for the economy. (Source: Bloomberg)
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China’s consumer inflation surged to the fastest in more than four years and credit growth slowed, as millions traveled home to feast with family and friends for the Lunar New Year holiday.

Domestic consumer prices are forecast to rise this year on resilient demand and recovering food prices, at a time when China’s factory inflation is providing less of an impulse to global price gains. And even though seasonal effects strongly distort the data, there is some evidence that a campaign to rein in credit risk is gaining further traction.