CN: Consumer Price Index

Mon Nov 09 19:30:00 CST 2015

Consensus Actual Previous
Y/Y % Change 1.4% 1.3% 1.6%
M/M % Change -0.3% 0.1%

October consumer prices were up 1.3 percent from a year ago a five year low and the slowest since May -- and down from September's increase of 1.6 percent. On the month, the CPI was down 0.3 percent. Urban CPI was up 1.3 percent, down from 1.6 percent the month before while rural consumer prices were up 1.2 percent after 1.5 percent in September.

Another slowdown in food prices pulled Chinese inflation lower even though the increase was up more than the overall index. Food prices were up only 1.9 percent after 2.7 percent in September and 3.7 percent in August. Non-food prices were up 0.9 percent after 1.0 percent and 1.1 percent in September and August respectively.

Low inflation reflects weakening demand and doesn't inspire confidence about the economic shift from manufacturing to consumption, yet at the same time it should allow Beijing to enact stimulus should it seek to support the economy further.

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.