Inflation data from China is scheduled for release today, focusing on March 2025. Deflation is anticipated at the wholesale level, while consumer inflation is expected to show a year-on-year increase, coupled with month-on-month deflation.
The economic calendar for Asia on 10 April 2025 includes details and timings in GMT. The right column reflects the previous month’s results, while adjacent columns indicate the median consensus forecasts where applicable.
Consumer And Producer Price Index
We note from today’s calendar that the Consumer Price Index (CPI) is forecast to rise year-on-year, underscoring mild price pressures at the household level. Simultaneously, the Producer Price Index (PPI) is likely to remain in decline, pointing to soft demand across industrial sectors, particularly in raw materials and intermediate goods. This combination—wholesale deflation and consumer-level inflation—signals a narrowing buffer for producers, whose margins could be quietly compressing. It often precedes price adjustments or a shift in inventory strategies, and tells us more about how demand is holding up than what central banks might do.
Zhong’s team sees the PPI falling by around 2.8%, while CPI may edge up near 0.7%. These levels are not alarming by themselves, but the gap between producer and consumer prices seems to have persisted for several months. Normally, when such gaps close, it either means middlemen pass on lower costs (helping retail), or consumers start reining in spending before wider price drops emerge. For now, the latter appears less likely, given that services inflation remains steady and food prices have been firm.
Year-on-year CPI prints can mislead when month-on-month softness is starting to emerge. We should pay careful attention to the sequential numbers. When the direction shifts first at the margin, it provides useful insight into future momentum. A drop in monthly CPI hints at easing underlying conditions—perhaps consumers are more price-sensitive, or seasonal effects are starting to wear off.
Market Conditions And Price Stability
The mix of easing producer prices and flat-to-firm consumer inflation implies a stable environment in goods markets. It also adds context to recent currency moves, especially with the renminbi having traded in a tight range relative to the dollar. With export demand remaining soft and factory gate prices failing to stabilise, policymakers are under less pressure to adopt aggressive tightening or stimulus. For now, the numbers give them room to wait.
Yu flagged that liquidity conditions remain favourable, as medium-term lending rates stayed on hold last month. That stability, combined with subdued inflationary forces, means there is currently no need to adjust funding expectations dramatically. However, if deflation at the producer level deepens or starts feeding into service prices, the tone from central authorities may grow more cautious.
In these settings, it’s useful to scan ahead—not just for next month’s inflation data, but for signals in industrial output and credit creation figures. If producer prices continue to weaken, watch freight rates and commodity benchmarks; they tend to move first and filter through to other areas. The bond market has not yet priced in any turn in overall inflation conditions, which is notable given recent moves in Treasury yields elsewhere.
We are now focusing on implied volatility measures for mid-year commodity contracts and calendar spreads in key metals and energy benchmarks. These are offering the first clues of whether this soft price pressure will persist or reverse. It is in these forward curves and options pricing that early adjustments are most visible. They help hint at whether market participants expect inflation to re-accelerate, settle, or dip further.
With that in mind, shorter-dated options on energy and industrials remain attractively priced for those looking to capture directional views. The cost of hedging upside risk has not risen in tandem with geopolitical events or stronger shipping data—likely due to an offset from weak factory pricing. If positioning remains light in those areas, the next inflation prints may bring sharp reactions—not because they’re surprises per se, but because expectations are not leaning strongly one way or the other.
As always, the more actionable insights often stem from watching how different markets respond to common inputs. This week’s inflation figures are not just about the headline numbers—they will shape how growth-sensitive instruments trade in the next 10–15 sessions.
