| Actual | Previous | Consensus | |
|---|---|---|---|
| Month over Month | 0.3% | 0.1% | |
| Year over Year | -0.8% | -0.3% | -0.5% |
Highlights
China's headline consumer price index fell 0.8 percent on the year in January after dropping 0.3 percent on the year in December. Headline inflation has now been close to zero or in negative territory for ten consecutive months and the year-over-year decline in January was the biggest of this period. The index rose 0.3 percent on the month after advancing 0.1 percent previously.
Producer price inflation data also published today also showed further weakness in price pressures. Together with previously published PMI surveys, today's inflation data suggest that China's economy remains weighed down by weakness in the property market despite recent measures aimed at improving liquidity conditions. This may strengthen the case for further policy adjustments at the upcoming annual meeting of the National People's Congress.
Today's data were weaker than the consensus forecast for a year-over-year decline of 0.5 percent in the CPI. The China RPI was unchanged at minus 21 while the RPI-P fell from minus 21 to minus 30, indicating that recent Chinese data in sum are coming in below consensus forecasts.
Producer price inflation data also published today also showed further weakness in price pressures. Together with previously published PMI surveys, today's inflation data suggest that China's economy remains weighed down by weakness in the property market despite recent measures aimed at improving liquidity conditions. This may strengthen the case for further policy adjustments at the upcoming annual meeting of the National People's Congress.
Today's data were weaker than the consensus forecast for a year-over-year decline of 0.5 percent in the CPI. The China RPI was unchanged at minus 21 while the RPI-P fell from minus 21 to minus 30, indicating that recent Chinese data in sum are coming in below consensus forecasts.
Market Consensus Before Announcement
After as-expected contraction of 0.3 percent in December, January's year-over-year rate is expected to decrease to 0.5 percent. China's CPI last peaked in January last year 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.
