China Annual Inflation Exceeds Expectations

The annual inflation reading in China improved in July above market expectations, as the CPI grew by 2.7% year on year, higher than the expected 2.6%, and also recorded 0.6% on m-o-m in July.

At the same time, the producer price index recorded a contraction more than expected, contracting on an annual basis by 2.4%, compared to market expectations of a decline of about 2.5% and a 3% contraction in June.

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living. The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.