China’s consumer prices fell at the steepest rate in three years in November, and producer costs fell further into negative territory.
According to a statement from the National Bureau of Statistics on the 9th, the consumer price index (CPI) in November decreased by 0.5% compared to the same month last year. This is the biggest drop since November 2020. The median estimate of economists compiled by Bloomberg was for a decline of 0.2%.
The producer price index (PPI) decreased by 3% compared to the same month last year. Market expectations were for a decline of 2.8%. The country has been in deflationary territory for one year and two months in a row.
The decline in CPI is partly due to the drop in pork prices. Abundant supplies of pork and sluggish consumption weighed on the market, and the government took measures to support prices. Pork accounts for a large portion of China’s CPI. Core CPI, which excludes volatile food and energy prices, rose 0.6% year-on-year, the same result as last month.
In contrast to the efforts of many central banks around the world to curb inflation, China has been experiencing falling prices for much of this year. Bloomberg Economics forecasts that deflation risks will persist into 2024 as the housing recession suppresses demand and prices.
Zhang Chiwei, chief economist at Pinpoint Asset Management, said deflationary pressures are increasing due to sluggish domestic demand. “This highlights the importance of fiscal policy.”
Original title:China’s Consumer Price Drop Worsens, Fueling Deflation Fears (1)(excerpt)
(Updated with statistical details and economist comments, etc.)
2023-12-09 02:04:56
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