19 Oct 2017
China Sourcing Update: Major Price Indicators (Sep 2017)
1. CPI growth eases in September
The year-on-year growth rate of China’s consumer price index (CPI) dropped from 1.8% in August to 1.6% in September, which was in line with market expectations (see exhibits 1 & 2).
The moderation in the CPI growth in September was mainly attributable to a higher base for comparison in September last year and a decline in vegetable prices. The year-on-year growth in vegetable prices went down markedly from 9.7% in August to minus 1.0% in September. Consequently, the year-on-year growth in the food component in the CPI fell from minus 0.2% in August to minus 1.4% in September. Meanwhile, the year-on-year growth in the non-food component edged up from 2.3% in August to 2.4% in September, driven by the rise in healthcare costs and housing rents.
Looking ahead, we expect the CPI growth to stay low in the fourth quarter, due largely to a higher comparison base in the fourth quarter last year as well as continued deflation in food prices.
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