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China’s consumer prices fall for the first time since 2009

On February 19, 2020, a new coronavirus broke out in Beijing, China, causing people wearing face masks to move vegetable packs to the wholesale market for agricultural products.

King Tinche | Reuters

Beijing — China’s consumer price index fell in November for the first time in about 10 years as food prices fell.

According to the National Bureau of Statistics of China, the consumer price index, an inflation indicator that tracks prices in baskets of consumer goods and services in November, fell 0.5% from a year ago.

According to the Wind Information Database, this decline was the first decline since October 2009.

China’s CPI from 2005 to 2020

Food prices fell 2% as pork prices fell 12.5% ​​from a year ago in November.

The fall in China’s staple food prices follows last year’s surge due to a shortage of pork due to the outbreak of African swine fever.

Nomura’s chief China economist, Tin Lu, said in an email that the fall in November didn’t make much sense as pork prices soared in the last three months of 2019. “Negative inflation (year-on-year) does not mean China’s deflation,” he said.

Economists did not expect significant changes in monetary policy from the People’s Bank of China as a result of lower CPI.

The so-called core CPI, excluding food and energy prices, rose 0.5% in November from a year ago. According to the Bureau of Statistics, medical costs rose 1.5% and prices for education, cultural activities and entertainment rose 1%.

The Producer Price Index, which measures prices of goods and services from the seller’s perspective, fell 1.5% in November from a year ago. According to the Statistics Bureau, this is a decrease of 0.6 points compared to the October figures.

“Given the shrinking PPI deflation, the underlying economy is strong,” McCawley’s chief China economist, Larry Fu, said in an email. As a result, he expects the central bank of China to overlook the overall decline in consumer prices and focus on reducing some stimuli.

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China’s consumer prices fall for the first time since 2009

Source link China’s consumer prices fall for the first time since 2009

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