The growth rate of credit increased slightly driven by government financing. In November, China's total social financing (TSF) increased by 10.1% year-on-year, rebounding slightly from the previous month, and credit growth continued to show signs of stabilizing. The strong issuance of new government bonds was the main driver of the slight upward credit growth this month, and shadow banking activities were still shrinking. Credit growth in the private sector slowed down moderately.
PPI inflation slowed as expected, and food inflation accelerated upward. As China's recent policies and measures have restrained the rise of raw material prices, and the rise of global commodity prices has slowed down, the upstream prices that have contributed the most to the rise of PPI in recent months have fallen. However, food prices accelerated month on month, driving the upward CPI this month, but the upward range was dragged down by service prices.
The policy is expected to be further relaxed and pay attention to price pressure. The policy signals released by the Politburo meeting show that steady growth in the coming year will be the focus of economic policy. Fiscal bond issuance supports the growth of cross-year social finance, and the deposit reserve ratio may be further reduced, but the price pressure will be a large-scale relaxation of liquidity constraints. The accelerated rise of food prices in recent months is particularly noteworthy.
