China’s consumer price index (CPI) increased 1.5% year-on-year in April, roughly inline with market expectations, according to data released by China’s National Bureau of Statistics.
On a monthly basis, the CPI fell by 0.2%.
Producer price index (PPI) continues to fall, declining by 4.6% year-on-year in April.
"Both CPI and PPI inflation came in below expectations…Muted level of inflation highlights weak demand growth and makes it easier for the government to step up the magnitude of loosening," says a report by Goldman Sachs Global Macro Research.
"In terms of monetary policy, we expect the next move to be a benchmark interest rate cut, and the size of the cut is likely to be more than 25 bps (the magnitude of the last interest rate cut)," says the report.
