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China’s 2% Inflation Doesn’t Tell Whole Story as Yuan Slumps

  • Consumer price index doesn’t fully reflect home prices: Hong
  • Factory prices, yuan forwards, real yields flag inflation jump
China's CPI Rises 2.5 Percent In May
Photographer: ChinaFotoPress/Getty Images
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China’s official inflation rate -- still near its 2 percent average of the past four years -- masks a surge in living costs felt by its most-influential citizens.

That’s why Hao Hong, chief strategist at Bank of Communications International Holdings Co. in Hong Kong, is looking at surging housing and factory prices, as well as weakening yuan forwards and collapsing bonds, to more effectively gauge inflation. As the consumer-price index rose 2.3 percent in November from a year earlier, the producer-price index jumped 3.3 percent and new home costs in first-tier cities surged almost 27 percent.