Factory-gate prices continued to decline last month thanks to falling commodity prices and waning supply chain disruption. But at the same time, a jump in demand for travel and other services following the removal of virus restrictions has nudged up consumer price inflation. We expect it to rise further in the near-term, though not by as much as in many other countries when they reopened. As such, inflation probably won’t be a near-term constraint on the PBOC’s ability to ease policy.
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