CN: Producer Price Index


Thu Jan 08 19:30:00 CST 2015

Consensus Actual Previous
Y/Y % Change -3.2% -3.3% -2.7%
M/M % Change -0.6% -0.5%

Highlights
The December producer price index slid 3.3 percent from a year ago after dropping 2.7 percent in November. The PPI has been declining since February 2012. On the month, the PPI declined 0.6 percent. For the full year 2014, the PPI was down 1.9 percent. The National Bureau of Statistics of China attributed the decline in the PPI to the fall in global oil prices.

All subcategories declined with the exception of clothing & related products, which was up 0.6 percent and consumer daily goods where prices were unchanged on the year. Overall consumer goods retreated 0.2 percent. Food & related products were down 0.3 percent and durable goods were down 0.6 percent. Production materials dropped 4.3 percent while raw materials procurement, fuel and power were 4.0 percent lower.

Definition
The PPI measures the change in the price of goods purchased and sold by producers. PPI for manufactured goods consists of a producer price index and purchaser price index. The industrial producer price index reflects the trend and level of prices change when the products are sold for the first time. The industrial purchaser price index reflects the trend and level of prices change for the products purchased by the industrial enterprises as intermediate inputs.

Description
It is a leading indicator of consumer inflation - when producers pay and charge more for goods the higher costs are usually passed on to the consumer.

The PPI measures the industrial products price changes for the domestic market. Unlike most other countries, China only produces a comparison with the same month in the previous year but not with the previous month. The PPI covers all manufacturing activities. The prices include excise taxes but exclude VAT. The industry breakdown for the PPI follows China's Industrial Classification of the National Economy. The data include a 38 industry breakdown and are not adjusted for seasonality. They are available by the 20th of the month following the reference month and are published in the daily NBS paper "China Information".

The statistical survey of industrial producer prices covers prices for over 11,000 products from 1702 subclasses, 191 groups; and the statistical surveys of industrial purchaser prices cover prices for over 6,000 industrial products from over 900 subclasses. Industrial producer prices are collected from combined surveys of key businesses and typical businesses. Starting from 2011, the key businesses are those with their turnover from primary activities over 20 million yuan, and the typical businesses are those with less than 20 million yuan. The surveys cover about 60,000 industrial enterprises in over 400 cities across the country.