| Actual | Previous | Consensus | |
|---|---|---|---|
| Month over Month | 0.1% | -0.5% | |
| Year over Year | -0.3% | -0.5% | -0.3% |
Highlights
China's headline consumer price index fell 0.3 percent on the year in December after dropping 0.5 percent on the year in November. Headline inflation has now been close to zero or in negative territory for nine consecutive months. The index advanced 0.1 percent on the month after dropping 0.5 percent previously.
Producer price inflation data also published today also showed further weakness in price pressures. Officials, however, have characterised recent activity data as evidence that China's economy has"good momentum" and that conditions are"turning for the better", suggesting they see no case for a significant shift in the policy stance for now.
Today's data were in line with the consensus forecast for a year-over-year decline of 0.3 percent in the CPI. The China RPI and the RPI-P rose from minus 7 to plus 7 and from zero to plus 20 respectively, indicating that recent Chinese data in sum are coming in close to consensus forecasts.
Producer price inflation data also published today also showed further weakness in price pressures. Officials, however, have characterised recent activity data as evidence that China's economy has"good momentum" and that conditions are"turning for the better", suggesting they see no case for a significant shift in the policy stance for now.
Today's data were in line with the consensus forecast for a year-over-year decline of 0.3 percent in the CPI. The China RPI and the RPI-P rose from minus 7 to plus 7 and from zero to plus 20 respectively, indicating that recent Chinese data in sum are coming in close to consensus forecasts.
Market Consensus Before Announcement
After year-over-year contraction of 0.5 percent in November, December is expected to see consumer prices decrease 0.3 percent. China's CPI last peaked in January at 2.1 percent.
Definition
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.
Description
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.
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.
