Zhongjin: Prices are still weak, and the trend depends on the strength and pace of policies.

On October 14th, Jinshi data reported that according to CICC’s research report, the year-on-year CPI and PPI in September both fell from 0.6% and -1.8% to 0.4% and -2.8%, weaker than the market’s expected 0.7% and -1.5%. The month-on-month CPI was weaker than seasonal, and the month-on-month PPI fell by 0.6%. Despite the boost in food prices from the start of the school season and the double festivals, non-food items remain weak. Among the 30 PPI sub-categories, 24 showed a negative rise on a month-on-month basis, indicating that the internal demand needs to be boosted and the output gap has not narrowed. The Political Bureau meeting at the end of September sent a clear signal to stabilize the rise, and a package of monetary, financial, and fiscal policies will be introduced successively to boost market confidence. The subsequent trend of prices depends on the intensity of countercyclical policies.