Categories: Market Overview

China is spreading deflation again

A slowdown in economic activity in China and beyond is putting pressure on consumer and producer inflation.

The consumer price index slowed from 2.8% to 2.1% y/y in October, the lowest level since May. The producer price index was 1.3% lower than in October 2021, when its annual growth rate reached a maximum of 13.5% y/y in this cycle.

Remarkably, the fall in the renminbi has failed to reverse the price trend. Although the weakness in domestic prices can easily be put down to a tight 0-covid policy and a stronger-than-expected economic slowdown, the pace of price growth in China is still much closer to the notion of normal than in the USA and major European countries. For example, the latest data noted a PPI growth of 45.8% y/y in Germany, 41.9% in the eurozone average, 15.9% in the UK and 8.5% in the USA.

Once again, China may return to the deflationary supplier label it had after 2012. The difference is that back then, this status carried negative connotations for the developed world, which tried to push up prices. The pressure on prices can be interpreted as an aggressive attempt to fight for market share.

The FxPro Analyst Team

The FxPro Analyst Team

Our team consists of financial market experts. Our dedicated professionals prepare reviews on the foreign exchange market situation, Crude Oil, Gold and Stock Indices. All the analysts are regularly published in the world leading economic media.

Share
Published by
The FxPro Analyst Team

Recent Posts

Dollar: Slowing Momentum, Same Direction

The dollar has paused its strengthening, as weaker-than-expected inflation data reduces fear of future Fed…

2 hours ago

Bitcoin Fell Back to Local Support

Bitcoin finds support near the 50-day moving average, but further declines in the stock market…

3 hours ago

EURCHF Wave Analysis 20 December 2024

- EURCHF falling inside minor impulse wave 5 - Likely to fall to support level…

3 days ago

USDCHF Wave Analysis 20 December 2024

- USDCHF reversed from resistance zone - Likely to fall to support level 0.8860 USDCHF…

3 days ago

The US dollar ends the year on a strong note

The US dollar is at two-year highs. Factors such as changes in the Fed's monetary…

3 days ago

How deep will crypto dive?

The crypto market is experiencing a decline, with a potential further drop in value. Bitcoin…

3 days ago

This website uses cookies