China’s November CPI rose to 0.7% y/y, matching consensus, while core inflation held at 1.2% and PPI stayed in deflationary territory, keeping domestic demand weak and supporting the ongoing USD/CNH downtrend, BBH FX analysts report.

USD/CNH downtrend remains intact amid currency dynamics

"China’s November CPI matched consensus. Headline inflation quickened to 0.7% y/y (the highest since February 2024) vs. 0.2% in October driven by a rise in food prices while core CPI remained at 1.2% y/y for a second straight month. PPI printed at -2.2% y/y (consensus: -2.0%) vs. -2.1% in October and still suggests that deflationary pressure remains high."

"China’s benign inflation backdrop continues to suggest that consumption spending is too weak. In our view, a continued appreciation in China’s currency could help the country shift its growth model towards consumer spending by boosting disposable income through cheaper imports. Bottom line: USD/CNH downtrend is intact."