Thursday, 13 Oct AM ET Instead, workers attempt to protect their real wages or to attain a target real wage by pushing for higher money or nominal wages. Loans to Private Sector. This page provides - China Consumer Price Index Chjna - actual values, historical data, forecast, chart, statistics, economic calendar and news. Consumer Price Index CPI.

Simply Intelligent Technical Analysis and Trading Strategies October 16, by Lokesh Madan Leave a Comment. Trading Inflation CPI number is very big fundamental economics indicator for trading NSE. But according to our complete analysis it shows. Trading on CPI number depends upon various factors i. So what we see there is not major impact on Indian market as per Inflation number trading is concern. Inflation tells us the changing increasing price of a range of goods or services; basically how much of something we can get for our money.

The rate of change of prices — the speed at which the price of goods and services that are bought by households or businesses alter — is called inflation. But prices can also fall, in a process called deflation, sometimes termed negative inflation. Inflation is more common than deflation, or at least it has been in the last 50 years or so, and so it has become associated with changes in the price of goods and services.

Historically, however, price falls were as common as price rises, as we will see later. Price inflation is caused when there is an excessive increase in money supply relative to the demand for it in the economy. In effect, too much money chasing too few goods. As a result of views like these, the INDIA had a monetary target for — 14 because it was thought that the best way to control price inflation the — 13 was a period of particularly high inflation was to control the increase in the quantity of money.

There are good reasons for this, but what it shows is that money supply itself is not that good a target for controlling inflation. In fact, the detail of what is causing which components of money supply to change and why, is crucial in working out cause and effect. Of course, it could be argued that the economy was so weak that raising interest rates to control inflation would have just trading economics china cpi more damage to the economy.

And in this sense, it is correct, as policymakers RBI did not raise interest rates because consumer inflation was above target, but cut them instead, because the economy was so weak, as suggested by the weak growth of money supply. So it would be true perhaps to argue that money supply has been correct, but the point is that it is not a good variable to use to target inflation, because it can send misleading signals.

Inflation can be thought of as being derived from the costs of producing domestic goods and services and the imported prices of goods and services. In fact the RPI is split into goods prices and services prices, and includes estimates of imported goods. Domestic costs can be measured through the GDP deflator, which does not include imported goods prices.

It can be broken down into broad categories such as profits and rents 40 per cent and wages about 60 per cent. Import prices are paid on the basis of the currency that the goods originate from and so the value of the Rupees will vary between these currencies and so will impact the price of those inputs. These goods can rise or fall in price for other reasons such as crop failure or a rise in demand or costsof course, but the change in the Rupees value against Dollar will also influence domestic price changes.

A rise in the Rupees could push down imported prices; a fall will push prices up. Consumer price inflation was so low between and It seems it was not about monetary policy, but the effect of global economic competition stemming from the inclusion of China and India, which drove down internal goods prices. Oil prices played a role, as did services goods prices and a strong sterling exchange rate.

The latter, in particular, would have pushed down imported price inflation. But this means that to understand INDIA inflation you do have to look at the detail of the inflation data, particularly goods price inflation. In terms of domestic prices, the main focus should be on services prices, which do appear to be remarkably stable, and high, at 5—6 percent a year, almost irrespective of what is happening to the wider economy.

This implies that domestic INDIA prices are sticky downwards. If we focus on just goods prices and compare those with INDIA import price inflation, we see that there is a very good fit. In other words, one of the key drivers of INDIA import prices inflation, and hence consumer price inflation, was goods prices. The period between and shows a negative inflation influence from goods prices. The fit between goods prices in the CPI and imports is strong over time, and their volatile trends tend to track each other well.

Recently, INDIA goods price inflation has been rising gain, perhaps due to the influence of the weaker currency. For inflation watchers, particularly those looking at fixed income investments; these are critical trends to explore when analyzing the inflation data, for investors in those types of assets lose out when inflation accelerates. What we see by analyzing complete data — Inflation rises when the Rupees falls and vice versa.

The period between and is one where the relationship held but in a rising trend for inflation and the Rupees. One underlying reason why inflation may have risen is the length of the Indian economic boom 16 yearswhich gathered particular pace during that period, driven by consumer borrowing. Price inflation would probably have been even higher, had the exchange rate not appreciated. Indian producer prices tend to move with CPI and RPI and the foreign exchange rate.

Cost-push inflation — inflation derived from a sharp rise in a key cost of firms. Demand-pull inflation — occurs when demand in the economy exceeds its ability to supply that demand too much money chasing too few goods. Built-in inflation — due to the effects of past inflation persisting into the present. Cost-push inflation is derived from a sharp rise in a key cost of firms. By that their is a rise in the price level, which then results in a real output decline.

Where as some experts argument centers on the fact that increases in the cost of goods and services do not lead to inflation unless the government and its central bank cooperate in increasing the money supply. The argument is that, if the money supply is constant, increases in the cost of a good or service will reduce the money available for other goods and services, and therefore the price of some of those goods will fall and offset the rise in price of those goods whose prices have increased.

One consequence of this is that Monetarist economists do not believe that the rise in the cost of oil was a direct cause of the inflation of the They argue that, when the price of oil went back down in the there was no corresponding deflation, so, therefore, they state, how can you argue that an increase in the price of oil causes inflation? What the central bank RBI should have done was not to accommodate the increase in price pressure and raise interest rates, tightening monetary policy.

In that case some expert argue that in a modern industrial economy, many prices are sticky downwards or downwardly inflexible, so that instead of prices for non-oil-related goods falling in this story, a supply shock would cause a recession, i. It is the costs forex adx trading kids such a recession that most likely cause governments and central banks to allow a supply shock to result in inflation.

Otherwise, in order to control the inflation being generated they would have to reduce GDP by even more and so make the recession even worse. In addition, although prices did not fall outright, the rate of price inflation eased back. If the fact that inflation is driven by a number of factors — not just supply — is taken into account, the picture changes.

Demand falls back in a recession and so inflation eases; alongside that, as prices fall, so wage expectations ease as well, creating a virtuous cycle of expectations adapting to the reality of falling prices, i. Demand-pull inflation occurs when demand in the economy exceeds its ability to supply that demand. Demand-pull inflation is considered to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real GDP rises and unemployment falls.

This assumes that all available resources in the economy are fully utilized,including employment and investment and raw materials. According to Expert theory, the more firms that are prepared to employ people, the more people will be employed. The aggregate demand AD will become greater and will make firms employ more people in order to produce more output. Due to capacity constraints, this increase in output will eventually become so small that the price of the good will rise.

At first, once this occurs, unemployment will go down, shifting AD1 to AD2, which increases demand Y by Y2 — Y1. This increase in demand means more workers are needed, and thus AD will be shifted from AD2 to AD3. However, this time, much less is produced than in the previous shift, but the price level has risen from P2 to P3, a much higher increase in price than in the previous move. This increase in price is called inflation.

Demand-pull inflation is in contrast to cost-push inflation, when price and wage increases are being transmitted from one sector to another. However, these can be considered as different aspects of an overall inflationary process: demand-pull inflation explains how price inflation starts, and cost-push inflation demonstrates why inflation, once begun, is so difficult to stop. Built-in inflation is due to the effects of past inflation persisting into the present.

Experts believes that built-in inflation originates from either persistent demand-pull or large cost-push supply-shock inflation in the past. Inflationary expectations play a role because, if workers and employers expect inflation to persist in the future, they will attempt to increase their nominal wages and prices now. This means that if people expect inflation to be high, it is high, because they behave in a way that confirms it. For instance, they will accept higher prices being charged for goods rather than shun them, which would force firms to lower prices.

Part of the reason why they will accept a higher price is because they will push for and get higher wages to compensate them. This then creates an inflationary cycle that is difficult to stop. Expectations and behavior are therefore capable of being inflation drivers in the way described. So inflation happens now simply because of subjective views about what trading economics china cpi happen in the future. Of course, following the generally accepted theory of adaptive expectations, such inflationary expectations arise because of persistent past experience with inflation.

It is part of the conflict theory of inflation, referring to the objective side of the inflationary process. Workers and employers usually do not get together to agree on the value of real wages. Instead, workers trading economics china cpi to protect their real wages or to attain a target real wage by pushing for higher money or nominal wages. Thus, if they expect price inflation — or have experienced price inflation in the past — they push for higher money wages.

If they are successful, this raises the costs faced by their employers. To protect the real value of their profits or to attain a target profit rate or rate of return on investmentemployers then pass the higher costs on to consumers in the form of higher prices. This encourages workers to push for even higher money wages to meet the rising prices, and so begins the cycle of inflation. In the end, built-in inflation involves a vicious circle of both subjective and objective elements, so that inflation encourages inflation to persist.

It means that the standard methods of fighting inflation, using monetary policy or trading economics china cpi policy to induce a recession, are extremely expensive, i. This suggests that alternative methods such as wage and price controls incomes policies may also be needed in the fight against inflation. Inflation can be broadly split into two categories — price inflation and earnings inflation. Earnings inflation is important in terms of its impact on the labour market and company profitability.

Lower earnings growth has been recorded across many sectors in Year — The consequences for this are reductions in disposable income, expenditure and economic growth. Earnings inflation is also relevant as a labour cost for businesses. Price changes, inflation or deflation, are measured from a basket of goods and services that are based on what is typically bought by the average consumer, either household or business.

Trading economics china cpi index is created that is based on a summary of the total price changes in this basket of goods and services. The change in this index is then taken as the inflation or the deflation rate, depending on whether it is going up or down. This is based on an estimate of the index over time.

Of India Central Trading economics china cpi Office CSOMinistry of Statistics and Programme Implementation publishes a number of other indices. All India Weights of different Sub-groups within Consumer Food Price Index Sub-groups As a target for official monetary policy setters, inflation is a key statistic for traders and investors. Inflation can have a detrimental impact on living standards if the prices of goods and services are rising beyond those of incomes.

Higher inflation can also erode the income to be gained from fixed assets, which creates issues for those dependent on fixed assets, i. On the flip side, inflation means that firms can earn higher profits from their goods or services without actually doing anything further. This, of course, has a knock-on effect on the equity markets. However, too much inflation can be a bad thing as it can make investments increasingly unpredictable and erode confidence in the markets, making investors less likely to invest, which is ultimately bad for economic growth.

Essentially, it makes calculating the rate of return on an investment uncertain because of the effect that inflation can have on eroding real returns. This unpredictability of future inflation is what can be so damaging for investment, and one of the reasons that policymakers are keen on keeping inflation low and stable, i. Increased profitability for firms.

Strengthening of the equity markets. It can be argued that targeting a higher inflation rate could boost growth, particularly in a prolonged recession. Detrimental impact on fixed incomes. Can cause standard of living to decline. Can be destabilizing as it creates uncertainty. Inflation trading economics china cpi lead to a boom-and-bust scenario. Discourages investment and long-term growth. It may devalue the exchange rate, creating further uncertainty.

This, in turn, has an impact on the real economy. Similarly, when prices are falling, in a deflationary environment, it erodes real value. The common perception is that this discourages people from spending. Although this is certainly the case for items of large capital expenditure and short-term hold, if prices are falling then real incomes are increasing and so households and businesses might trading economics china cpi be encouraged to spend.

The Japanese economy, for example, has faced a persistent deflationary environment. Despite this, real per-capita income is holding up, although growth has slowed as people delay purchases. Deflation also means that companies earn less profit, so they in effect have to run faster just to stay still. Over the long term this is not tenable. Can encourage spending as people have more money in their pocket as prices fall.

Value of assets eroded. Discourages spend on non-essential or large-ticket items. Increases the value of debt, making it more difficult to pay down. Can erode the value of put option debit spread 50s policy as interest rates cannot fall below 0 per cent.

The RBI, for example, has an inflation target of 6 per cent but it has not hit that target since Does this mean that it has given up on inflation? That would be the easy reading. But in fact, with the economy having been in and out of recession since then, arguing that it should have raised rates to hit an inflation target with the effect of damaging an already weak economy is not one anyone accepts would have been the correct response.

Pulling all of the Indian main indices of inflation together, whether wages, prices CPI or CFPI, shows the same sort of trend, up or down, over any length of time. This means that they are closely linked and that to understand what the inflation pressures are in the economy, one must analyse all of them when they are released, in a broad way. Doing that means that maximum benefit will be derived. Because interest rates and the inflation rate tend to be inversely related, the likely moves of the RBI to raise or lower interest rates become more transparent under the policy of inflation targeting.

If inflation appears to be above the target, the Bank is likely to raise interest rates. This usually but not always has the effect over time of cooling the economy and bringing down inflation. If inflation appears to be below the target, the Bank is likely to lower interest rates. This usually again, not always has the effect over time of accelerating the economy and raising inflation.

Under the policy, investors know what the Bank considers the target inflation rate to be and therefore may more easily factor in likely interest rate changes in their investment choices. This is viewed by policymakers who target inflation directly as leading to increased economic stability. Trends in inflation tell us about the direction of interest rates and policy. But they also tell us about the stresses and strains in the economy between demand and supply and between relative bargaining trading economics china cpi and the different agents and sectors that make up the complex system that is a modern economy.

Rising inflation matters because it means the official interest rate cost of money may go up or that fiscal policy might be toughened. It erodes the real value of wealth, so it informs people to push into products that protect them from its corrosive effects on wealth. The opposite is also true, of course: it could herald boom time as inflation falls if it also means a fall in interest rates.

So it clearly matters that we trading economics china cpi the analysis of the direction of inflation right. Provisional annual inflation rate based on all India general CPI Combined for the month of May, on point to point basis May over May is 8. The corresponding provisional inflation rates for rural and urban areas for Trading economics china cpi are 8. Inflation rates final for rural and urban areas for April are 9. Provisional annual inflation rate based on all India CFPI Combined for the month of May, on point to point basis May over May is 9.

The corresponding provisional inflation rates for rural and urban areas for May are Inflation rates final for rural and urban areas for April are In addition to this, Consumer Food Price Indices CFPI for all India for rural, urban and combined separately are also released w. Inflation rates on point to point basis i. Menu Workshop Premium Intraday signals Live Signals MCX Signals Library Partners Marketcalls Simply Intelligent Technical Analysis and Trading Strategies.

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CPI, China, And Options Expiration Equals Volatility

Economic Research, Trading Strategies, Economic Calendar and Real Time Charts for Currencies, Equities and Commodities. Watch video  · China trade, PPI, CPI in focus for signs of economic health. Capital Economics forecast imports would return to positive Follow CNBC International on. China Economic Outlook. China ’s Trade Structure China has experienced uninterrupted trade surpluses since the Consumer Price Index (CPI), money.