China’s economic downturn generates deflation
2023.01.10 03:32
China’s economic downturn generates deflation
By Kristina Sobol
Budrigannews.com – According to China Beige Book International, price growth is likely to be muted even when the economy recovers later this year, and deflationary pressure in China grew worse in the fourth quarter.
In a report released on Tuesday, CBBI stated that businesses experienced the weakest growth in wages and input costs since the middle of 2020 in the final three months of 2022. It also stated that sale price growth slowed to the lowest level since late 2020.
CBBI, a provider of independent economic data, surveyed 4,354 businesses during the time period for the report.
It stated, “Short-term disinflation is already here, with sales price growth sluggish.” This could enter deflation in the first quarter as a result of the Covid blow to retail.
Official data showed that Covid disruptions reduced demand, which resulted in consumer inflation slowing to 1.6% in November from 2.1% the previous month. Even though economic growth is picking up, Bloomberg polled economists anticipate that full-year inflation will remain relatively subdued at 2.3% this year.
According to the CBBI report, inflation will likely return after the first quarter, but “will largely represent the making up of lost ground before fading.”
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It stated that China still faces long-term deflationary pressures from demographic challenges, so any substantial price increases would require prolonged policy easing.
