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(Z1) Off Lows, But Remains Weak


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Bullish Price Sequence

--CPI Lower Than Expected; YTD CPI Half Government's 2017 Price Target Rate
--PPI In Line with Expectations, Helped by High Base in November 2016
     BEIJING (MNI) - Chinese consumer and producer price growth decelerated in
November, with year-to-date CPI remaining well below the annual target set by
the government, according to data released Saturday by the National Bureau of
     Consumer Price Index Below Expected on Food Drop
     CPI rose 1.7% in November on an annualized basis, down from 1.9% in
October, which was a highest since January. The November gain was lower than the
1.8% median forecast in an MNI survey. 
     Food prices dropped for the 10th month in a row on a year-on-year basis,
helping to contain the overall consumer price index. Food price dipped 1.1% in
November compared with the same period a year ago, with the drop accelerating
from the 0.4% decline in October.
     Non-food prices, on the other hand, accelerated to 2.5% y/y, 0.1 percentage
point higher than October. The non-food gain was again led by medical care
prices, which posted a rapid 7.0% y/y gain due in large part to the continued
effect of the government's removal of price caps. Residence prices rose 2.8% for
the third month in a row, while recreation and education prices rose 2.0%, and
other articles and services rose 1.7%.
     In the first eleven months of the year, CPI grew 1.5%, slower than the 2%
gain in the same period last year and half the government's 3% goal for the full
     On a monthly basis, CPI was flat, down from +0.1% in October, as a food
category price drop was countered by a non-food price gain. Month-on-month price
growth decelerated for the second month in a row from the recent high of 0.5%
posted in September. 
     A 4.8% m/m decline in vegetable prices was the main factor behind the food
price drop, as warm weather contributed to increased production and improved
storage of supply, Sheng Guoqing, senior statistician at the NBS, said in a
statement Saturday.
     Monthly price gains for meat, eggs and fruits helped rein in further
decline of food prices. The prices of both eggs and fruit rose 2.1%, while goat
meat prices gained 2% and beef 0.4%.
     On the other hand, all non-food price categories rose in November from
October except recreation and education, which was down 0.5%. Clothing as well
transportation and telecommunications prices both reported gained 0.5%, followed
by residence and healthcare at 0.2%, and daily goods and services at 0.1%. Other
goods and services prices showed no change. 
     Producer Price Index Decelerates As Expected
     PPI grew 5.8% y/y in November, matching the MNI survey median forecast and
decelerating sharply from the 6.9% increase in October. The November rate was
lowest since July, when it was 5.5%.
     Sectors which saw a y/y growth slowdown included ferrous metal smelting and
flattening, down 6.9 percentage points, non-ferrous metal smelting and
flattening, down 5.6 percentage points, oil processing, down 1.7 percentage
points, and coal mining and washing, down 8.6 percentage points.
     The PPI y/y growth drop was due in part to the high base in the same period
last year.
     PPI rose 0.5% m/m in November, slower than the 0.7% growth in October, and
the lowest monthly gain since the 0.2% in July. Slowing price growth for oil
processing (-1.9%), raw chemical materials and chemical products (-1.4%),
non-metal mining ore (-1.3%), and paper making (-0.2%) contributed to the m/m
slowdown, according to the NBS.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI BEIJING Bureau; +1 202-371-2121; email:
[TOPICS: MAQDS$,M$A$$$,M$Q$$$]