CN: Producer Price Index

Sun Oct 15 20:30:00 CDT 2017

Consensus Actual Previous
Y/Y % Change 6.3% 6.9% 6.3%
M/M % Change 1.0% 0.9%

China's headline producer price index increased by 6.9 percent on the year in September, up from 6.3 percent in August and above the consensus forecast of 6.3 percent. This is the second consecutive increase in headline PPI inflation and takes it to its strongest level since March. The index rose 1.0 percent on the month in September after an increase of 0.9 percent in August.

The increase in headline PPI inflation was broad-based. Prices for production materials rose 9.1 percent on the year in September, up from 8.3 percent in August, while the year-on-year increase in fuel and power costs accelerated from 7.7 percent to 8.5 percent. Prices for consumer goods also increased at a slightly faster pace, up 0.7 percent on the year in September after an increase of 0.6 percent in August.,

In year-to-date terms, the PPI has advanced 6.5 percent on the year to September, up from the year-to-date increase of 6.4 percent in September, compared with a decline of 3.2 percent in the equivalent period last year.

The increase in in headline PPI inflation in September takes it close to levels seen early in the year and is consistent with PMI survey results. The Caixin PMI survey for the manufacturing sector showed input costs rose in September at the fastest pace so far this year, with the equivalent survey for the services sector also showing a stronger increase in input costs.

The Producer Price Index (PPI) measures the change in the price of goods purchased and sold by producers. The industrial producer price index reflects the trend and level of prices change when the products are sold for the first time. The industrial purchaser price index reflects the trend and level of prices change for the products purchased by the industrial enterprises as intermediate inputs.

It is a leading indicator of consumer inflation - when producers pay and charge more for goods the higher costs are usually passed on to the consumer.

The PPI measures the industrial products price changes for the domestic market. Unlike most other countries, China only produces a comparison with the same month in the previous year but not with the previous month. The PPI covers all manufacturing activities. The prices include excise taxes but exclude VAT. The industry breakdown for the PPI follows China's Industrial Classification of the National Economy. The data include a 38 industry breakdown and are not adjusted for seasonality. They are available by the 20th of the month following the reference month and are published in the daily NBS paper "China Information".

The statistical survey of industrial producer prices covers prices for over 11,000 products from 1702 subclasses, 191 groups; and the statistical surveys of industrial purchaser prices cover prices for over 6,000 industrial products from over 900 subclasses. Industrial producer prices are collected from combined surveys of key businesses and typical businesses. Starting from 2011, the key businesses are those with their turnover from primary activities over 20 million yuan, and the typical businesses are those with less than 20 million yuan. The surveys cover about 60,000 industrial enterprises in over 400 cities across the country.