23 Jan 2018
China Sourcing Update: Major Price Indicators (Dec 2017)
Major Price Indicators
1. CPI growth accelerates in December
The year-on-year growth rate of China’s consumer price index (CPI) went up from 1.7% in November to 1.8% in December, which was lower than market expectations.
The reason for the slight acceleration in the CPI growth in December was that a slower fall in food prices outweighed a smaller increase in non-food prices in the month. The year-on-year growth in the food component in the CPI picked up from minus 1.1% in November to minus 0.4% in December. Meanwhile, the year-on-year growth in the non-food component edged down from 2.5% in November to 2.4% in December.
In 2017, China’s CPI growth was 1.6% yoy, down from 2.0% yoy in 2016, and was well below the government’s target of 3.0% set for the year.
Looking ahead, we expect that the CPI reading in January and February 2018 will be distorted by the timing of the Chinese New Year, which falls in February this year as opposed to January last year. The CPI growth is likely to drop markedly in January 2018 and then rise sharply in the following month, given a higher base for comparison in January but a lower comparison base in February last year.
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