20 April 2017
China Sourcing Update: Major Price Indicators (Mar 2017)
1. CPI growth goes up slightly in March
The year-on-year growth rate of China’s consumer price index (CPI) inched up to 0.9% in March from a two-year low of 0.8% in February, lower than market expectations(see exhibits1 &2).
The slight increase in CPI growth in March was due to acceleration in the year-on-year growth in the non-food component in the CPI, which came in at 2.3% in the month after registering 2.2% in February, driven mainly by a rise in prices of healthcare, residence and education, culture and recreation. Meanwhile, the year-on-year growth in the food component edged down from minus 4.3% in February to minus 4.4% in March, which was mainly attributable to a further fall in the prices of pork and vegetable.
Looking ahead, we predict that the food inflation will pick up in the near future due to a slowdown in the year-on-year decline of vegetable prices; meanwhile, we expect the non-food inflation to rise slightly in the near term. Overall, in our view, the CPI growth is likely to go up but stay below 2%in the coming couple of months.
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