Nomura Securities: November or has reproduced CPI inflation

In the afternoon of December 2, Nomura Securities Sun released a report today that inflation in November may have been reproduced, expected to be about 0.4% per cent year-on-year. The following is the full report: The Ministry of Commerce's real-time data shows that the prices of edible agricultural products (which are highly correlated with food price inflation in the CPI basket) rose by 0.8% in the month of November.　　Coupled with an increase in energy prices and public utility fees, suggesting November or the re-emergence of CPI inflation, we estimate that inflation is likely to be around 0.4% per cent a year.　　While this will mark the end of the 9-month deflation period, we expect CPI inflation in 2010 and 2011 to be controlled, given the large overcapacity in manufacturing capacity and the rapid rise in labour productivity. We reiterate our CPI inflation expectations: 2010 Inflation is 2.5%, 2011 is 3.5%. We expect the PBOC to start raising interest rates as early as April 2010, mainly to prevent real deposit rates falling below 0%.