CN: Consumer Price Index

Thu Dec 08 19:30:00 CST 2016

Consensus Actual Previous
Y/Y % Change 2.2% 2.3% 2.1%
M/M % Change 0.1% -0.1%

China's consumer price index rose 2.3 percent year-on-year in November, up from an increase of 2.1 percent in October, and just above the consensus forecast of 2.2 percent. This is the third consecutive increase in inflation and is the strongest increase in consumer prices since February, March and April, when the CPI also rose by 2.3 percent year-on-year.

The CPI rose 0.1 percent on the month in November, the fourth monthly increase in the last five months.

The increase in headline inflation in October reflects a further acceleration in food price inflation, up from 3.7 percent in October to 4.0 percent in November. Food price inflation has risen in each of the last three months and is now at its highest since June. Non-food price inflation has also picked up steadily in each of the last three months, increasing further from 1.7 percent in October to 1.8 percent in November. Most categories of consumer spending saw faster annual price increases in November, though inflation eased for health care and household articles and service.

Inflation advanced in both urban areas, up from 2.2 percent to 2.3 percent, and in rural areas, up from 1.8 percent to 2.0 percent.

Although the increase in headline inflation in recent months has mainly been driven by food prices, other categories of consumer spending have also seen stronger price increases. This suggests that broader demand pressures in the economy have strengthened since earlier in the year and should ease pressure on officials to deliver additional policy stimulus in the near-term. Nevertheless, it looks likely that annual inflation for 2016 will fall short of the government's target level of around 3.0 percent.

Consumer Price Index (CPI) is an index that measures changes over time in the price level of consumer goods and services purchased by residents, which reflects the overall changes in price level.

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.