China Consumer Price Index: +0.2% Y/Y vs +0.1% expected, AUD/USD meets support

Ross J Burland FXStreet

The Consumer Price Index has been released by the National Bureau of Statistics of China as follows:

China December CPI +0.2 pct YoY (Reuters poll +0.1 pct).

China December CPI +0.7 pct from previous month (Reuters poll +0.4 pct).

China says December food CPI +1.2 pct from a year ago; non-food CPI 0.0 pct.

China December PPI -0.4 pct YoY (Reuters poll -0.8 pct).

China December PPI +1.1 pct from the previous month.

Reuters reports that ''China's factory gate prices fell by less than expected in December, official data showed on Monday, suggesting China's manufacturing sector continues to see a steady recovery from the COVID-19 shock.''

''The producer price index (PPI) fell 0.4% from a year earlier, the National Bureau of Statistics said in a statement. The index was expected to fall 0.8%, according to a median forecast in a Reuters poll, after a 1.5% drop in November.''

''The consumer price index (CPI) rose 0.2% from a year earlier in December, the statistics bureau said. The index was expected to rise 0.1%, according to the Reuters poll, after easing 0.5% in November.''

AUD/USD, which is down some 0.7% on the day, was supported at the lows ahead of the data remains fragile.

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 purchasing 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 CNY.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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