10 Aug 2017
China Sourcing Update-Major Price Indicators (Jul 2017)
Major Price Indicators
1. CPI growth eases in July
The year-on-year growth rate of China’s consumer price index (CPI) edged down from 1.5% in June to 1.4% in July, which was below market expectations (see exhibits 1 & 2).
The reason for the moderation in the CPI growth in July was that a smaller increase in non-food prices outweighed a slower decline in food prices in the month. The year-on-year growth in the non-food component in the CPI slowed from 2.2% in June to 2.0% in July, largely due to price declines in transportation and smaller price increases in health care and other articles and services. Meanwhile, the year-on-year growth in the food component in the CPI edged up from minus 1.2% in June to minus 1.1% in July.
Looking ahead, we expect the CPI growth to rise in August due to a lower comparison base in August last year. Afterwards, the CPI growth is likely to stay low for the rest of the year because of continued deflation in food prices and softness in non-food prices, as well as a higher comparison base in the fourth quarter of last year.
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