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China’s August CPI showing continuing modest inflationary pressures, 2.4% for the year vs the 2.4% expected and 2.7% prior.

PPI was expected to remain in deflationary territory, arriving today at -2% vs the prior: -2.4%/year.

Key notes

  • CPI +2.4 pct from a year ago (Reuters poll +2.4 pct).
  • CPI +0.4 pct from previous month (Reuters poll +0.4 pct).
  • Food cpi +11.2 pct from a year ago; non-food cpi +0.1 pct.

Description of the Consumer Price Index

The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index. The purchase power of the CNY is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the