High-frequency commodity data signals an end to China's deflationary trend

High-frequency indicators give CEIC users early insight into official data published with a time lag.

In this case, we've charted the correlation between commodity prices and China's producer price index (PPI) -- showing that the deflationary trend seen since mid-2024 is likely to break.

The China Commodity Index (CCI), which was developed by Caixin and Gresham Investment Management, includes 28 categories traded on the futures exchanges in Shanghai, Dalian and Zhengzhou -- broken down into five broad groups. It emphasizes production of commodities produced within China's borders. Energy (including petroleum products, coal, and methanol) has a 35% weighting in the CCI, as does the industrial metals group. That's followed by agriculture (16.5%), food & fiber (8.2%) and precious metals (5.3%).

The CCI has increased by 5% over the course of June, touching a three-month high on June 23. As the index historically moves in sync with PPI (which measures the cost of goods at the factory gate), it's likely that this recovery will feed through to consumer inflation.

Falling PPI earlier this year had reportedly been linked to lower international prices for crude oil, as well as a seasonal slowdown in demand for energy.