CN: Consumer Price Index


Tue Apr 10 20:30:00 CDT 2018

Consensus Actual Previous
Y/Y % Change 2.6% 2.1% 2.9%
M/M % Change -1.1% 1.2%

Highlights
China's headline consumer price index increased by 2.1 percent on the year in March, down from 2.9 percent in February and falling short of the consensus forecast of 2.4 percent. The index fell 1.1 percent on the month after an increase of 1.2 percent previously.

Food prices were the main factor driving the decline in headline inflation in March, increasing by 2.1 percent on the year after an increase of 4.4 percent in February. Non-food price inflation also moderated from 2.5 percent to 2.1 percent, reflecting weaker increases for transport and communication charges . Housing cost inflation was steady at 2.2 percent. Urban inflation fell from 3.0 percent in February to 2.1 percent in March, while rural inflation fell from 2.7 percent to 1.9 percent.

The relatively large fall in headline CPI inflation in March follows a sharp increase in February to 2.9 percent from just 1.5 percent in January. This volatility has largely been driven by the impact of the timing of lunar new holidays, which took place in mid-February this year but in late January in 2017. Looking at year-to-date data corrects for this impact, with the year-to-date increase in the consumer price index at 2.1 percent in March, down only slightly from 2.2 percent in February.

The Chinese government announced last month at annual meetings of the National People's Congress that it will target inflation at "around 3 percent" in 2018, as it did in 2017.

Definition
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.

Description
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.