CN: Consumer Price Index

Thu Feb 08 19:30:00 CST 2018

Consensus Actual Previous
Y/Y % Change 1.5% 1.5% 1.8%
M/M % Change 0.6% 0.3%

China's headline consumer price index increased by 1.5 percent on the year in January, down from 1.8 percent in December and in line with the consensus forecast. This is the lowest level of inflation since July and the seventh consecutive month in which the direction of inflation has reversed from the previous month. The index rose 0.6 percent on the month in after an increase of 0.3 percent previously.

Food prices fell by 0.5 percent on the year in January, slightly weaker than the fall of 0.4 percent recorded in December. Volatility in food prices has been the main factor driving the lack of trend in headline inflation in recent months, but this month it was non-food inflation that reversed course after a period of relative stability, dropping from 2.4 percent in December to 2.0 percent in January. Weaker price gains for transportation and communication were largely responsible for this move, with the year-on-year increase in these prices dropping from 1.2 percent to just 0.2 percent. Urban inflation fell from 1.9 percent in December to 1.5 percent in January, while rural inflation fell from 1.7 percent to 1.5 percent.

The Chinese government will likely announce an inflation target for 2018 at annual meetings of the National People's Congress scheduled to take place next month.

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.