中国：CPI疲软，反内卷缩小PPI通缩幅度 - 但全面再通胀尚需时日-China_ CPI soft, anti-involution narrows PPI deflation_ But broad-based reflation will take time

Summary of J.P. Morgan's Economic and Policy Research on China Industry Overview - Industry: Economic analysis focusing on China's Consumer Price Index (CPI) and Producer Price Index (PPI) trends Key Points Consumer Price Index (CPI) - Headline CPI fell by 0.4% year-on-year (oya) and 0.03% month-on-month (m/m, seasonally adjusted) in August, which was softer than the expected decline of 0.2% oya [1] - The primary contributor to the decline was food prices, which decreased by 4.3% oya and 0.8% m/m, reducing the headline CPI's annual rate by 0.9 percentage points [1][4] - Transportation and communication costs also saw a slight dip of 0.1% m/m, influenced by a 0.9% m/m decline in vehicle fuel prices due to lower global oil prices [1] - Core CPI inflation increased to 0.9% oya, reflecting a 0.1% m/m uptick, indicating modest gains in other categories such as clothing (+0.2% m/m), household services (+0.2%), and medical care (+0.4%) [1][4] Producer Price Index (PPI) - PPI rose by 0.1% m/m in August, marking the first sequential gain in 14 months, with the annual PPI deflation rate narrowing to 2.9% oya [2][4] - Consumer goods PPI fell by 1.7% oya, while producer goods PPI dropped by 3.2% oya, indicating slower declines in mining, raw materials, and manufacturing [2] - The improvement in PPI is attributed to government anti-involution efforts aimed at promoting orderly production and price competition, with notable reductions in price declines for coal processing (10.3 percentage points), ferrous metal smelting (6.0), and photovoltaic equipment manufacturing (2.8) [2][4] Economic Outlook - The sequential uptick in PPI is seen as encouraging, but broad-based reflation is expected to take time due to the modest and lagged impact of anti-involution measures [3][4] - The sustainability of recent producer price gains in upstream raw materials and new economy sectors remains uncertain, with limited spillover effects to other sectors [6] - CPI inflation is projected to hover around 0% in the coming months, influenced by persistent food price weakness and a domestic supply-demand imbalance [6][4] Additional Insights - The government's anti-involution efforts are expected to be data-dependent and moderate, considering the broader industry scope and the higher share of non-state-owned enterprises (non-SOEs) [5][4] - The macroeconomic environment is fragile, particularly with ongoing weakness in the housing market, which may limit the effectiveness of policy measures [5][4] Conclusion - The current economic indicators suggest a cautious outlook for both CPI and PPI in China, with ongoing deflationary pressures and a need for careful monitoring of government policies and market conditions to gauge future trends and potential investment opportunities.