China’s consumer and producer prices both declined in July from a year ago, a bout of deflation that’s likely to be temporary as policymakers face pressure to step up monetary and fiscal support.
The consumer price index dropped 0.3% last month from a year earlier, the National Bureau of Statistics said Wednesday, marking its first decline since February 2021. Economists surveyed by Bloomberg had predicted a 0.4% decline in prices.
Producer prices fell for a 10th consecutive month, contracting 4.4% in July from a year earlier, slightly worse than expected. It’s the first time since November 2020 that both consumer and producer prices registered contractions.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
China is experiencing a rare period of falling prices as consumer and business demand weakens after an initial burst in the first quarter following the ending of pandemic restrictions. A prolonged property market slump, plunging demand for exports and subdued consumer spending are weighing on the economy’s recovery.
While PPI has likely bottomed out, “it will be rather hard to emerge from deflation in the rest of the year,” he said.
Using the gross domestic product deflator — a measure of economy-wide prices — China was in deflation in the first half of the year. The International Monetary Fund defines deflation as “a sustained decline in an aggregate measure of prices,” such as the CPI or the GDP deflator.
Unlike the temporary drop in consumer prices in late 2020 and early 2021 driven by falling pork prices, the contraction this time around is driven by more longer-term factors such as falling external demand and the property downturn. With export prices falling, China is set to pass on deflationary pressure to other countries via its massive goods trade.
Source from: bloomberg