PPI Drops 3.0% in 'V' Rebound, CPI More Stable
Suspected Simple Errors or Statistical Adjustments, Statistical Bureau's Credibility Plummets
[Asia Economy Beijing=Special Correspondent Jo Young-shin] The credibility of the National Bureau of Statistics of China has plummeted.
The National Bureau of Statistics of China announced the trends of the Producer Price Index (PPI) and Consumer Price Index (CPI) for June on its website at 9:30 a.m. on the 9th (local time).
A statement titled "June PPI remained at the same level as the same month last year" was posted on the website. The PPI for June last year was 0%. Since the peak of the COVID-19 outbreak in February, the Chinese Producer Price Index turned negative and recorded negative values every month: March (-1.5%), April (-3.1%), and May (-3.7%).
As the title states, if the June PPI is at the same level as the same month last year, it would sharply rise to around 0%. This means the PPI would suddenly form a 'V' curve.
The PPI, which reflects prices of raw materials, intermediate goods, and product shipment prices, is one of the leading economic indicators that provide insight into the vitality of the manufacturing industry.
Before the PPI announcement, Chinese media reported optimistic economic outlooks, suggesting that if investment and consumption are recovering, the second-quarter economic growth rate is likely to turn positive. Last month, the average daily coal consumption and blast furnace operating rate of China's six major power companies rose to levels similar to the same period last year. Fixed asset investment was also reported to be on an increasing trend.
However, the actual released figure was minus 3%. Although it was slightly less negative than the previous month (-3.7%), it was an improvement compared to the market expectation (-3.2%).
The June CPI also showed a different figure from the initial report. The initial headline was "June CPI rose 2.7% compared to the same month last year."
The actual released figure was 2.5%, which is 0.2 percentage points lower than 2.7%. The CPI had surged to 5.4% in January and has since shown an unstable downward trend.
The market's reaction to the statistical error on this day is unclear whether it was a "simple mistake" or "statistical manipulation." However, even if it was a simple mistake, the credibility of the National Bureau of Statistics inevitably suffers greatly. The Bureau has not yet provided a clear explanation regarding this matter.
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