China Producer Price Index (PPI) y/y shows changes in the value of manufactured goods from the producer perspective, in the specified month compared to the same month of the previous year. The index is calculated based on a survey of about 50,000 enterprises from more than 400 cities.
The producer price index is considered as a leading indicator of consumer prices, and hence of the inflation. It is a more accurate preliminary indicator, if compared to CPI: if producer prices grow, consumer prices are expected to grow accordingly. These two indicators are closely correlated.
PPI growth can have a positive effect on yuan quotes, unless hyperinflation is developing in the country.