——Interpretation of May’s CPI and PPI data by NBS statistician Yu Qiumei
China's consumer price index (CPI), a main gauge of inflation, dropped 0.5 percent month on month and grew 2 percent year on year in May, while China’s producer price index (PPI), a measure of costs for goods at the factory gate, grew 0.5 percent month on month and dropped 2.8 percent year on year in May, according to data released by the National Bureau of Statistics (NBS) on June 9. As to the released data, NBS statistician Yu Qiumei made some interpretation.
I.CPI sees month-on-month drop and a fall of 0.3 percentage points in terms of year-on-year hike
On a month-on-month basis, the CPI dropped 0.5 percent in May. The main reason behind that is the large price drop of fresh vegetable. Cold-air outbreak attacked most parts of China in early 2016. As a result, the production and transportation of fresh vegetable were dampened and the price of vegetable was pushed much higher than it was in previous years. As seasonal vegetable comes into the market and the vegetable supply gradually increases, the price of vegetable returns to normal level. The price of fresh vegetable dropped 21.5 percent month on month in May, contributing 0.64 percentage points of CPI’s month-on-month drop and exceeding CPI’s total month-on-month drop. According to the monitoring of main food prices in 50 cities, vegetable saw large price drop and the price of some vegetable even dropped over 30 percent. While pork price saw a further hike of 2.3 percent in May, accounting for 0.07 percentage points of CPI’s month-on-month growth. The prices of refined oil products were raised twice and the month-on-month price hike of gasoline and diesel oil reached 3.7 percent and 3.8 percent, totally contributing 0.06 percentage points of CPI’s month-on-month growth.
On a year-on-year basis, the CPI grew 2.0 percent in May, 0.3 percentage points lower than the growth in April. Pork prices skyrocketed in May by 33.6 percent year on year, contributing 0.77 percentage points of CPI growth, while vegetable prices jumped by 6.4 percent year on year, down 16.2 percentage points from the previous month, accounting for 0.14 percentage points of CPI growth, in comparison with 0.56 percentage points in April. Prices of some services saw relatively high year-on-year growth with the price of nursing, clinical diagnosis, housekeeping and preschool education hiking by 10.5 percent, 8.2 percent, 5.3 percent and 4.1 percent respectively.
II.PPI sees further month-on-month hike and a year-on-year drop of 0.6 percentage points from April
On a month-on-month basis, May's PPI inflation edged up 0.5 percent, 0.2 percentage points lower than the inflation in April. There are three characteristics for the month-on-month change. Firstly, the price hike of some industrial sectors narrowed. The price of the smelting and plating of ferrous metal and the oil and natural gas extraction hiked by 2.5 percent and 12.3 percent month on month, respectively, narrowing by 5.9 percentage points and 0.5 percentage points compared with the growth in April. Secondly, the price of oil processing climbed 4.1 percent year on year, expanding by 3.1 percentage points from the reading in April. Thirdly, on a month-on-month basis, the price of coal mining and washing hiked by 1.8 percent in May from a 0.3 percent decline in April.
The producer price index (PPI) dropped 2.8 percent year on year in May, narrowing from a 3.4-percent drop in April. As to industries, the price index of oil and natural gas extraction, oil processing, coal mining and washing, smelting and plating of non-ferrous metals, chemical raw material and chemical products dropped 21.5 percent, 15.6 percent, 10.2 percent, 7.7 percent and 5.4 percent, respectively, contributing 1.7 percentage points of PPI’s year-on-year drop and accounting for 60 percent of the total drop.
Translated by Jennifer Lu
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