The drop in the prices of pork led China to the lowest level of consumer price inflation in 11 years. The phenomenon led economists to keep their eyes on China. The country’s consumption is expected to bring changes in business, and soon, the country’s economic recovery.
Prices of pork dropped, and it might linger for a little longer
Noted from CNBC, the prices of pork is 2.8% lower on October in comparison to the previous year. The last time China recorded a drop in the pork’s price was in February 2019. Bruce Pang of China Renaissance associated sudden spike in the live pigs’ supply to the declining price. With the current situation, he expects the prices will continue on the decline for the current quarter. Pang also commented that the consumer price index might drag overall inflation in China lower.
Consumer price index in China repressed, slow business becomes the trigger
Financial Times reported that China only recorded a 0.5% rise of consumer index price year-on-year in October. The number slightly missed the expected 0.8% and is quite significantly lower from 1.7% and 2.4% in September and August respectively. It is also the lowest number China has ever recorded since the last 11 years. Due to the slowing down inflation, economists are currently paying attention to how Chinese consumption may affect the country’s recovery from the pandemic.
Slow consumption triggers declining inflation in China
Noted from Financial Times, Jinyang Chen, greater China economist at HSBC commented that the weakening core CPI inflation is caused by weak demand. Thus, retailers and companies might need to cut off prices to engage more sales. Chen further added that among all businesses, automobiles showed the most significant increase. However, Chen pointed out that “the path for recovery in consumption will be very gradual,” as headline CPI might take another deep fall in the upcoming months.
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