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Main article: Economy of China
2024
Inflation 0.3% in May
China's CPI rose 0.3% YoY (m/m = -0.1%) in May 2024, hovering above zero for the fourth straight month.
Factory prices have been in the deflation band since late 2022.
January deflation growth to 0.8%
The consumer price index fell 0.8% YoY in January - the weakest since September 2009.
The producer price index fell 2.5%, compared with forecasts of a 2.6% decline. Producer prices have been falling for the 16th month amid weak demand.
2023
Deflation at the end of the year
Consumer prices in China in 2023 showed the longest band of decline since 2009, threatening a deflationary spiral.
Reducing inflation to zero
China managed to avoid importing foreign costs by preventing inflation from accelerating. If in the G7 and EU countries the peak inflation rates reached or exceeded double-digit values, in China only at the moment in Q3 2022 inflation reached 3%, and by May 2023 the inflationary trend was downward with the possibility of switching to deflation in the summer of 2023.
In addition to monetary factors, there are three reasons, Spydell Finance wrote. First, the standard overproduction crisis, which created a high free buffer of unused capacity, when for decades the high-intensity growth of industrial production and then the service sector with a sufficiently high intensity and level of productivity created a canopy of supply.
Against the background of a slowdown in the export of goods mainly to countries with developed economies from Q3 2022, there is a hyperconcentration of commodity mass in the domestic market, which creates a pronounced disinflationary orientation.
External costs for raw materials are quite limited influenced by consumer prices in 2022 and also have a disinflationary impact in 2023 as raw materials decline sharply. However, oversupply dominates the hierarchy of priorities.
Effective demand decreases as the rate of population income growth slows at the national level, which is associated both with a slowdown in the economy and with the restriction of class transfer, that is, with the transition of workers from one income group to another. This is due to the formed and rather monolithic structure of the economy, where the sectoral transformation is predominantly frozen or occurs rather slowly.
Against the background of a decrease in export growth rates and significant problems with domestic demand, the only reserve remains - government spending and investment, but they are a problem due to a high budget deficit.
2022
Annual inflation 2%
The Consumer Price Index (CPI) of China - the main indicator of inflation - in 2022 increased by 2% in annual terms, according to data from the State Statistical Office of the PRC.
Inflation in November - 2.1%
Inflation in June - 2.5%
In China, consumer inflation reached a two-year high due to rising pork prices and reached 2.5% in June 2022. Industrial inflation (PPI) continued to decline in June to 6.1%.
China is still able to export its inflation abroad.
2012: Inflation - 1.8%
In July 2012, inflation in China slowed to 1.8 percent, the lowest in two and a half years. The Central Bank decided to soften its financial policy, to a lesser extent fearing price increases. The effect of these measures may appear towards[1] end of the year[1].
Notes
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