CN: Consumer Price Index

Mon Jun 08 20:30:00 CDT 2015

Consensus Actual Previous
Y/Y % Change 1.3% 1.2% 1.5%
M/M % Change -0.2% -0.2%

Chinese consumer prices increased at their slowest pace since January 2015 in May, underscoring slack in the economy and waning trends in consumption. China's consumer price index decelerated to a pace of 1.2 percent in May from 1.5 percent in April and below the 1.3 percent pace predicted by forecasters. The reading is well below Beijing's target of "around 3 percent" this year.

The CPI was down 0.2 percent on the month and up 1.3 percent for the year to date. Urban prices increased 1.3 percent on the year after increasing 1.6 percent in April, while rural prices were up just 1.0 percent after 1.3 percent. Transportation & communication declined 1.3 percent after retreating 1.6 percent the month before. Food prices were up 1.6 percent after increasing 2.7 percent in April.

Disinflation pressures continue to remain as overcapacity and a lack of demand are keeping price growth down. Housing in particular is a source of downward price pressure, as are energy prices.

The consumer price index measures the change in the price of goods and services purchased by consumers. The average price of various goods and services are sampled and then compared to the sampling a done year earlier.

Consumer prices account for a majority of overall inflation, which is carefully monitored by investors worldwide. Investors worldwide monitor Chinese price changes closely. A pickup in inflation could mean an increase in interest rates is in the offing from the People's Bank of China while an easing could mean looser monetary policy. The monthly CPI is broken down by 8 categories with more detail available on the following day including aggregate information by urban and rural areas and provinces.

The CPI measures the change in the level of prices for a specified basket of goods and services normally purchased by urban and rural residents. Approximately 226 areas throughout the country are covered, including 80 counties and 146 cities. The current CPI is an annually chained Laspeyres price index and has been available since 2001. From 1978 to 2000, the index was compiled using current year weights for most items.