27 Jan 2017
China Sourcing Update (Price Index for US Imports from China) Dec 2016
Price index for US imports from China stays stable
Compiled by the US Department of Labor, the price index for US imports from China stayed flat at a six-year low of 100.2 in December (see exhibit 1). In our view, a possible reason for the flat reading in December was that the impact of the depreciation of the Chinese yuan against the US dollar was offset by the rise in exfactory prices of Chinese products in Renminbi terms: China’s producer price index of industrial products (PPI), a major indicator of ex-factory prices of industrial products, rose by 1.6% mom in the month. Going forward, as material costs have continued to increase, the ex-factory prices of Chinese products are expected to rise further in the near future. All in all, we predict that the price index for US imports from China will start to stabilize in the coming months.
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