In a sign that a weaker Yuan combined with fiscal stimulus are helping to spur inflation in the economy, the latest Chinese inflation figures released by the National Bureau of Statistics showed the headline annualized CPI figure rise to 2.50%. Besides marking the highest point since May of 2014, the figure’s gradual improvement gives the People’s Bank of China some breathing room. The primary drivers of these gains were food prices with consumer goods also pressuring the data higher.
Furthermore, gains in producer prices which accelerated to 5.50% year over year through the end of January suggests that more gains may be in store for consumer prices in the coming months. After gaining ground the last five sessions, USDCNH Is now back on the retreat following the data which suggests this round of monetary easing has come to an end.