(Bloomberg) -- China’s surging consumer inflation will rise further on the current oil spike, but the jump won’t last long and probably won’t affect the pace of monetary easing in 2020, according to Citigroup Inc (NYSE:C).
Consumer inflation in China will hit 5% in January as higher oil prices combined with a low base from 2019 drive up the cost of vehicle fuel, petrochemicals and other by products such as plastic packaging, Yu Xiangrong, a Hong Kong-based Citigroup (NYSE:C) economist, wrote in a note.
He also said producer prices are more likely to turn positive in the month, as China relies heavily on foreign supplies for oil and more expensive imports pass through to downstream sectors.
Inflation data for December is due for release on Jan 9.
Yet, the surge caused by supply shocks won’t last long since there’s still a possibility that Iran and the U.S. could find common cause in a new agreement, Yu said. The central bank will “keep its easing bias to contain downside risks in 2020,” he said.
To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Sharon Chen
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