Year-on-year CPI measures the change in the current price level compared with the same period of the previous year. Month-on-month CPI reflects changes relative to the immediately preceding statistical period. The formulas published by the National Bureau of Statistics are "(Current Period Value − Same Period of Previous Year Value) ÷ Same Period of Previous Year Value" and "(Current Period Value − Previous Period Value) ÷ Previous Period Value" respectively. Year-on-year data is better for observing longer-term trends, while month-on-month figures are more sensitive yet susceptible to seasonal factors. The National Bureau of Statistics notes that diverging directions between year-on-year and month-on-month readings do not mean contradictory data. They simply adopt different comparison base periods.
The year-on-year rate for July of this year stands at 3.0%. The August year-on-year rate is calculated as (103.2 ÷ 101 − 1) × 100%, approximately 2.18%. The August month-on-month rate is (103.2 ÷ 103 − 1) × 100%, roughly 0.19%. The year-on-year growth rate declines, yet the price index remains higher than last month. The reason lies in the elevated base period from August of last year.
This example illustrates statistical relationships and cannot be used to conclude that gold prices will definitely rise or fall. When reading US CPI reports, you should also verify the seasonal adjustment standards applied to year-on-year and month-on-month data. Do not directly perform calculations using figures sourced from series with different statistical standards.
Analysing August 2026 CPI
Interpretation of August 2026 data released by the National Bureau of Statistics shows that China’s national CPI shifted from a 0.1% month-on-month decline in the prior month to a 0.4% month-on-month rise. The year-on-year growth rebounded to 0.8%, and core CPI excluding food and energy registered a 1.0% year-on-year increase. This signals stronger short-term price movements while annual price gains remain moderate.
In this set of Chinese data, both year-on-year and month-on-month metrics rose, differing from the hypothetical scenario mentioned above. It demonstrates multiple measurement standards within one report. This is not US inflation data and cannot be directly used to predict the Federal Reserve’s next policy moves.
Focusing solely on year-on-year readings may overlook price shifts in the most recent month. Relying only on month-on-month data risks mistaking a one-month rebound for a sustained trend. Only by combining year-on-year, month-on-month, core indicators and major sub-items can you fully grasp the insights delivered by the release.
How CPI Data Factors Into Gold Analysis
When researching US inflation releases and US-dollar-denominated gold, check whether the data alters interest rate expectations. Follow the analysis steps below. The Chinese CPI example is only for explaining statistical reading methods:
Step 1: Compare actual data against market expectations. If the actual figure comes in lower than forecast, expectations for rate hikes or prolonged high interest rates may weaken. A higher-than-expected reading may trigger the opposite effect. Confirm the source and timing of forecasts before the data release.
Step 2: Check whether year-on-year and month-on-month figures point in the same direction. Rising year-on-year and month-on-month readings signal consistent short-term and long-term signals. If year-on-year rises while month-on-month falls, further checks on base periods and seasonal adjustments are required.
Step 3: Verify confirmation from market variables. If the reactions of the US dollar, real yields and gold are inconsistent, avoid explaining the entire market trend merely with the labels "inflation bullish" or "inflation bearish".
Common Misinterpretations
A positive month-on-month reading does not mean prices have entered a sustained upward cycle. A falling year-on-year rate also does not indicate prices have returned to previous levels. Year-on-year metrics measure changes in growth rates and cannot be directly equated to declines in absolute prices. For sub-items such as gold jewellery prices, distinguish their impact on consumer prices from the pricing mechanism of international spot gold.