|Y/Y % Change||2.2%||2.1%||2.3%|
|M/M % Change||0.2%||0.1%|
China's consumer price index rose 2.1 percent in December, down from the seven-month high of 2.3 percent recorded in November, and just below the consensus forecast of 2.2 percent. On the month, the CPI rose 0.2 percent in December after an increase of 0.1 percent in November.
The moderation in headline inflation in December was mainly driven by food prices, which rose 2.4 percent year-on-year, down from an increase of 4.0 percent in November. Non-food price inflation, in contrast, accelerated from 1.8 percent in November to 2.0 percent in December. Inflation fell in both urban areas, down from 2.3 percent to 2.1 percent, and in rural areas, down from 2.0 percent to 1.9 percent.
Despite the small drop in December, headline inflation remains well above the recent low of 1.3 percent recorded in July and is back near levels seen earlier in the year. December data also shows stronger price pressures in several service-sector industries, including education, health care, transport and communication, offsetting smaller price increases for clothing and household articles and services.
With inflation ranging between 1.3 percent and 2.3 percent over 2016, today's data confirms that annual inflation fell well short of the government's target for this year of "around 3.0 percent". Nevertheless, with consumer price inflation picking up strongly in recent months, and other data released today showing another sharp increase in producer price inflation in December, officials are now likely to be less concerned about weak price pressures and increasingly focused on making sure inflation does not rise too sharply in coming months.
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.