CN: Consumer Price Index

Wed Nov 08 19:30:00 CST 2017

Consensus Actual Previous
Y/Y % Change 1.8% 1.9% 1.6%
M/M % Change 0.1% 0.5%

China's headline consumer price index increased by 1.9 percent on the year in October, up from 1.6 percent in September and just above the consensus forecast of 1.8 percent. The index rose 0.1 percent on the month in October after an increase of 0.5 percent in September.

Stronger headline inflation in October was mainly driven by a smaller drop in food prices, which declined by 0.4 percent on the year after declining by 1.4 percent in September. The year-on-year increase in non-food prices, meanwhile, was unchanged at 2.4 percent, its highest level since April. Within the non-food category, price gains were stronger for transportation and communication and for household articles and services, steady for housing and weaker fro clothing and health care.

Urban inflation rose from 1.7 percent in September to 1.9 percent in October, while rural inflation advanced from 1.4 percent to 1.7 percent. In year-to-date terms, the CPI is up 1.5 percent on the year to October, unchanged from the year-to-date increase recorded in September and August.

Chinese Premier Li Keqiang announced in March at the annual National People's Congress that officials would retain an inflation target of "around 3.0 percent" for 2017. A further acceleration in food price inflation back into positive territory over the last two months of the year will likely be required for this target to be hit, with non-food price inflation having been steady between 2.0 percent and 2.5 percent since the start of the year.

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.