Part 3/9:
China utilizes two primary measures of inflation: the Consumer Price Index (CPI) and the Producer Price Index (PPI). The CPI tracks the year-on-year change in the cost of a weighted basket of goods that are commonly bought by Chinese households. On the other hand, the PPI measures the inflation for Chinese industry by monitoring the cost of certain commodities and industrial inputs—essentially the prices factories pay for their goods.
Currently, both CPI and PPI figures are negative, which is alarming. The PPI stood at negative 2.5% in January, slightly improving from December's figure of negative 2.7%. However, it is the CPI that poses a greater concern as it fell more steeply than analysts had predicted.