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China Sourcing Update (Major Price Indicators) Oct 2016

  1. CPI growth edges up in October

    The year-on-year growth rate of China’s consumer price index (CPI) rose from 1.9% in September to 2.1% in October, which was in line with market expectations (see exhibit 1 and 2).

    The pick-up in CPI growth in October was largely due to the rise in the year-on-year growth in the food component in the CPI, which came in at 3.7% in October after registering 3.2% in September. For example, the year-on-year growth in vegetable prices, a major driver of China’s inflation, rose further to 13.0% in October from 7.5% in September. Meanwhile, the year-on-year growth in the non-food component in the CPI increased from 1.6% in September to 1.7% in October.

    Looking ahead, we expect that the food inflation will stay high in the near future, due to the recent rise in vegetable prices; and we expect the non-food inflation to inch up in the coming months, given the low base for comparison in November and December 2015. Overall, in our view, the CPI growth is likely to stay around the current high level in the near term.


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Content provided by Fung Business Intelligence
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