12 May 2017
China Sourcing Update: Major Price Indicators (Apr 2017)
- CPI growth accelerates in April
The year-on-year growth rate of China’s consumer price index (CPI) went up to 1.2% in April from 0.9% in March, higher than market expectations (see exhibits 1 & 2).
The main reason for the rise in CPI growth in April was a slowdown in the year-on-year decline in the food component in the CPI, which saw its year-on-year growth improve from minus 4.4% in March to minus 3.6% in April largely because of a slower decline in the prices of vegetable. Besides, the year-on-year growth in the non-food component edged up from 2.3% in March to 2.4% in April, driven mainly by price increases in healthcare, tourism, transportation and education services.
Looking ahead, we predict that the food deflation will slow further and eventually disappear in the near term, as the year-on-year growth of vegetable prices is expected to return to the positive territory soon; meanwhile, we expect the non-food inflation to stay around the current level in the near future. Overall, in our view, the CPI growth is likely to rise markedly in the coming months and reach 2% yoy in June.
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