Rising imports ignite hope for stronger domestic demand despite China deflation
ALBAWABA – China deflation struck again in October, data showed Thursday, as the consumer price index slipped, with Food, tobacco and alcohol prices falling the most and domestic demand edging up significantly.
Data released earlier this week pointed to a stronger-than-expected bounce in imports, according to Agence France-Presse (AFP), offsetting some of the concerns of a continued deflation.
The consumer price index (CPI), which is the main gauge of inflation, fell 0.2 percent year-on-year, the National Bureau of Statistics report showed.
The CPI was dragged by a further slump in pork prices, down 30.1 percent, speeding up from a 22 percent slide in September, amid an oversupply of pigs and weak demand, Reuters reported.
China deflation strikes again in October as the CPI dips on lower food and alcohol prices - Shutterstock
Food, tobacco and alcohol prices recorded the largest falls in October, according to AFP.
China deflation amid plummeting exports adds to economic worries
China experienced short periods of deflation before, including at the end of 2020 and early 2021, largely also due to a collapse in pork prices, and back in 2009.
Notably, pork is the most widely consumed meat in the country.
According to NBS, producer prices sank for the 13th month in a row, tumbling 2.6 percent, against the 2.7 percent forecast in the Bloomberg survey, suggesting more weakness down the road.
However, the rise in imports could be a signal that domestic demand in China is recovering.
The government has in recent months unveiled a series of measures – particularly aimed at the property sector - and announced a huge infrastructure spending plan.
Exports have taken another dip as well in October, as global demand waned towards the end of 2023.
Recent talks between China and the US bode for reconciliation as the two countries began exchanging visits in October, ahead of the presidents Joe Biden and Xi Jinping’s meeting in San Francisco this month.
