China posted negative inflation in October, with the consumer price index falling 0.2% year-on-year and indicators of domestic economic activity showing the biggest slowdown since the pandemic.
Factory prices fell further, raising doubts about the likelihood of a broader economic recovery.
The consumer price index was compressed by the plunge in pork prices by 30.1%. However, even structural inflations, which does not include energy and food prices, slowed to 0.6% from 0.8% in September, also suggesting China’s battle with deflation and the risk of missing the government’s target of around 3% inflation at mid-levels in 2023.
Consumer prices had declined in July and returned to positive territory in August, while they remained stable in September. Producer price deflation in manufacturing continued for 13The consecutive month.
“The data show that combating ongoing deflation amid weak demand remains a challenge for Chinese economic officials,” said an economist at Jones Lang Lasalle.
The Chinese authorities do not see anti-inflation
On a monthly basis, the CPI fell 0.1% after rising 0.2% in September. The producer price index fell 2.6% year-on-year after a 2.5% drop in September.
However, Chinese authorities are downplaying the price cut. “There is no anti-inflation in China and there won’t be in the future,” the statistical office said in August.
China also announced the first quarterly shortfall in foreign direct investment flows ever recorded, following moves by the West to reduce dependence on the world’s second largest economy.
Moody’s forecasts the Chinese economy to grow by 5% in 2023 and by 4% in 2024 and 2025.
With information from Reuters
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