In August, China’s consumer price index (CPI) recorded a year-on-year increase of 0.1%. Despite escaping deflation, the increase did not reach the expected 0.2%.
China’s consumer price index (CPI) registered a year-on-year increase of 0.1% in August, according to official data published this Saturday, after a fall of 0.3% in July, in a phenomenon known as deflation.
Although the world’s second largest economy managed to escape deflationthe increase revealed by China’s National Bureau of Statistics was smaller than expected according to analysts consulted by the financial agency Bloomberg, which expected a recovery of 0.2%.
In July, the CPI fell 0.3% year-on-year, with China entering deflation for the first time since February 2021in the midst of the Covid-19 pandemic, due to the drop in the price of pork, the most consumed in the country.
The Chinese economy had been on the brink of deflation for months, indicating that a recovery in spending had not materialized after authorities abolished the zero Covid-19 case policy at the beginning of the year.
Deflation is a fall in prices over time, rather than an increase (inflation).. The phenomenon reflects weakness of domestic consumption and investment and it is especially serious, since a fall in the price of assets, normally contracted through credit, creates an imbalance between the value of loans and bank guarantees.
Despite the recovery in prices in August, many analysts do not exclude a relapse in the coming months, at a time when the main drivers of China’s growth continue to slow down.
Deflation in China could help contain prices in Europe, the president of the consulting firm IMF – Financial Market Information, Filipe García, told Lusa in August.
On the other hand, the producer price index (PPI), which measures factory prices, contracted again in August, falling 3%, for the eleventh consecutive month, the National Bureau of Statistics of China admitted this Saturday.
Analysts consulted by Bloomberg already expected this decline, after the PPI decreased 4.4% in July.
This index provides an overview of the health of the economy, with Falling producer prices mean lower profit margins for companies.
Chinese companies were penalized by a year-on-year drop of 8.8% in August in the Asian country’s exports, according to data published this Thursday by the General Administration of Customs of China.
Even so, the fall in official data, denominated in dollars and used as a reference by international analysts, was smaller than expected.
This situation has a direct impact on tens of thousands of Chinese companies that focus on manufacturing products for export and whose operations are currently in slow motion.
A situation that represents a new obstacle for China, at a time when youth unemployment reached a historical maximum of more than 20% in June, which led the authorities to suspend the publication of the official rate.
Source: Observadora
