CN: Consumer Price Index

Tue Jan 09 19:30:00 CST 2018

Consensus Actual Previous
Y/Y % Change 1.9% 1.8% 1.7%
M/M % Change 0.3% 0.0%

China's headline consumer price index increased by 1.8 percent on the year in December, up from 1.7 percent in November and just below the consensus forecast of 1.9 percent. The index rose 0.3 percent on the month in December after no change in November.

The small increase in headline inflation in December was driven by a smaller fall in food prices, which declined by 0.4 percent on the year after dropping by 1.1 percent in November. The year-on-year increase in non-food prices, meanwhile, moderated from 2.5 percent to 2.4 percent. Within the non-food category, price gains were slightly weaker for transportation and communication slightly stronger for clothing, and household articles and services, and unchanged for housing.

Urban inflation picked up from 1.8 percent in November to 1.9 percent in December, while rural inflation rose from 1.5 percent to 1.7 percent. In year-to-date terms, the CPI is up 1.6 percent on the year to December, up from the year-to-date increase of 1.5 percent recorded in each of the three previous months.

Chinese Premier Li Keqiang announced early last year officials would retain an inflation target of "around 3.0 percent" for 2017. Although non-food price inflation has picked up in recent months, persistent weakness in food prices meant that annual headline inflation fell well short of this target at 1.6 percent, down from 2.0 percent in 2016.

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.