Is China celebrating zero inflation… or not?
China has achieved the German dream, yet it won't uncork the bottles of champagne, and there's a reason. Chinese consumer prices unexpectedly flattened in June 2023, missing market expectations and the May figure of a 0.2% increase. This was the lowest reading since deflation in February 2021, mainly due to a decline in non-food prices (-0.6% from May's fixed reading), then in products including industry,
with a further drop in the cost of transport (-6.5% compared to -3.9% in May) while that of education slows down (1.5% vs 1.7%). Meanwhile, inflation held steady healthily (at 1.1%) while house prices were flat after declining 0.2% previously. Food prices, meanwhile, rose the most in three months (2.3% versus 1.0%), due to a rebound in the cost of both fresh vegetables and eggs and despite a steep drop in pork prices .
Core consumer prices, which exclude food and energy prices, rose 0.4% year on year , the lowest since March 2021, following a 0.6% increase in May. On a month-to-month basis, consumer prices unexpectedly fell 0.2%, the fifth consecutive month of declines and compared to the consensus of a flat print.
Here is the short chart
And here is the graph in a longer perspective, which shows the particularity of the current moment
Core inflation also shows the peculiarity of the moment
Yellen was in China, did she go to ask Xi Yinping how to contain inflation, given that China is doing it very well? I don't think so, because in Beijing this figure is seen at its true weight: it shows that the economy is slowing down, that industrial production is in excess, and that therefore prices are falling. Certainly, a part is due to the retreat of energy prices, but a substantial part is linked to manufacturing productions and services, even education which seemed "In tito" until yesterday.
Now we await new economic stimulus, or a change in government policy.
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The article China celebrates zero inflation… or not? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-cina-festeggia-linflazione-a-zero-oppure-no/ on Mon, 10 Jul 2023 14:00:31 +0000.