The People’s Bank of China used to be committed to cap accelerating inflation. Now, however, it witnesses the slowing CPI growth.
According to the latest data released by China’s National Bureau of Statistics , in July inflation decreased to its lowest reading over the last 30 months - 1.8%.
A low CPI provides scope for more stimulus measures. And as investors are waiting for new steps, demand for raw materials such as crude oil is augmenting.
A barrel of light WTI oil grew in price to the level of 93 US dollars 80 cent on the upbeat news.
Yet, there is a restrictive effect stemming from the report on China’s industrial production for July.
Industrial output in China fell to 9.2% on an annual basis, even though the forecast was right the opposite: economists had expected upturn in the sector to 9.8%. Last time such disappointing data was unveiled was in May 2009. It is pretty clear that this quarter China’s GDP will hardly improve from 7.6%.