Business Maverick

China’s Consumer Prices Decline for First Time Since 2009

A fruit vendor wearing a protective mask uses a smartphone while waiting for customers at a fresh produce market in Shanghai, China, on Saturday, Feb. 15, 2020. China is entering the "most critical time" in its fight to contain the spreading coronavirus, a government official said. Photographer: Qilai Shen/Bloomberg

China’s consumer prices fell for the first time in more than a decade, dragged down by a slump in pork prices after supplies recovered from last year’s swine disease.

By Bloomberg News

Word Count: 319
(Bloomberg) —
  • The consumer price index fell 0.5% last month from a year earlier — the first contraction since October 2009 — following a 0.5% gain in October, the National Bureau of Statistics said Wednesday. The median forecast in a Bloomberg survey of economists was 0%
  • Factory deflation eased, with the producer price index declining 1.5% on year, compared with a 2.1% decrease in October. The median estimate was -1.8%

Key Insights

  • Consumer-price inflation has been on a downward spiral in recent months, largely due to an easing of pork prices — a key element in the CPI basket — from last year’s surge
  • Food prices fell 2% in November from a year ago, while pork prices plunged 12.5%
  • Deflation in consumer prices will likely be temporary though as the economic recovery strengthens. China’s exports surged more than 20% last month, while the purchasing managers’ index reached a three-year high
  • Core inflation, which removes the more volatile food and energy prices, was unchanged at 0.5%. China International Capital Corp. economists led by Huang Wenjing wrote in a note that the core measure will continue to pick up as the recovery gathers momentum
  • With the central bank signaling it wants to withdraw monetary stimulus, it’s unlikely the latest CPI figures will prompt it to ease policy. However, economists say falling prices could be harmful amid the recovery if consumers and businesses delay purchases in anticipation of lower prices
  • Xing Zhaopeng, a markets economist at Australia & New Zealand Banking Group in Shanghai, said it’s unlikely that consumer deflation will persist, given “higher crude prices and the coming peak season of travel before the New Year.” He added “the broad improvement in producer prices signals the low risk of deflation in 2021.”
(Updates with comment from economist in last bullet point.)

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

Make your taxes work for you

Donate to Daily Maverick’s non-profit arm, the Scorpio Investigative Unit, by 29 February 2024 and you’ll qualify for a tax break.

We issue Section 18A tax certificates for all donations made to Daily Maverick. These can be presented to SARS for tax relief.

Make your donation today

Support Daily Maverick→
Payment options

Otsile Nkadimeng - photo by Thom Pierce

A new community Actionist every week.

Meet the South Africans making a difference. Get Maverick Citizen in your inbox.