Analysts at TD Securities are expecting China’s headline inflation to decelerate to 2.1% y/y in June, with prices down 0.2% from May.
- “Lower gasoline prices will provide the main driver for the monthly print; gasoline prices fell by 8% for the month as a whole, which should shave 0.3pp off the headline print in June. Elsewhere, food prices should see modest gains following the recent strength in producer prices, however, 3.5% is likely to mark the peak for food price inflation since FX passthrough from a stronger Canadian dollar should start to provide some relief in the coming months.
- We also see scope for a pullback in telecom prices after new "unlimited" data plans were introduced by major service providers in early June. Looking past the headline, exclusion based core measures (ie. ex-food and energy) should hold stable given the large drag from energy prices while the Bank of Canada's preferred core measures are likely to edge lower to 2.0% y/y on average.”