China’s deflation cycle is likely approaching its end, according to Zhaopeng
Xing of ANZ.
He expects both producer and consumer prices to have risen in March, with the 1Q
GDP deflator likely returning to positive territory for the first time in three
years.
While higher oil prices are contributing to inflation, he notes they are
unlikely to resolve structural imbalances and may even weigh on household
consumption. Still, policymakers may prefer “bad” inflation over deflation, with
China is expected to continue pursuing reflation by curbing price wars.
