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China Sourcing Update: Major Price Indicators (Feb 2017)

Major Price Indicators

  1. CPI growth falls sharply in February

The year-on-year growth rate of China’s consumer price index (CPI) slumped to a twoyear low of 0.8% in February from 2.5% in January, lower than market expectations (see exhibits 1 & 2).

The timing of the Chinese New Year this year continued to skew the CPI reading in February. The Chinese new year in 2016 was from early February, while that in 2017 began in the final week of January. Due to a higher comparison base in February last year, the year-on-year growth in the food component in the CPI went down from 2.7% in January to minus 4.3% in February, and the year-on-year growth in the non-food component dropped from a five-year high of 2.5% in January to 2.2% in February.

Looking ahead, we predict that the food inflation will stay negative in the near future due to a recent fall in food prices; meanwhile, we expect the non-food inflation to rebound in the near term. Overall, in our view, the CPI growth is likely to rise but stay below 2% in the coming couple of months.

Major-Price-Indicators-FEB-2017

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Content provided by Fung Business Intelligence
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