China: prices fall in July and confirm another deflation

By: Agencies

The Consumer Price Index (CPI) in China fell -0.3% in July and the second largest economy in the world fell back into the field of deflationafter a few days ago it was reported that exports from that country fell 9.2% compared to the same month of the previous year, standing at around 2.02 trillion yuan (US$280,010 million, 255,863 million euros).

Although this price drop may seem beneficial for purchasing power, in the long run it is a macroeconomic threat because consumers tend to delay purchases in anticipation of further price drops.

Data from the National Statistics Office (ONE) confirm China’s return to a context that it had already overcome at the beginning of 2021, in which low internal and external demand pushes prices down. If cheap Chinese products flood global markets, they could have a negative impact on manufacturers in other countries.

Previously, the Chinese government had tried to boost the internal consumption of its citizens by making some credits more flexible, so various specialists do not rule out that it could resort to cuts again.

This is an unusual situation in the global context, where most central banks freeze or harden their monetary policies to prevent inflation data from being maintained for a longer period of time.

food down

In the breakdown, food prices in China weighed down 1.7% in July, leveraged by a fall in the order of 14% for the values ​​of meat, especially pork (-26%), an essential product in the basic basket of that country.

Services from the Asian giant, on the other hand, rose 1.2% in the seventh month of the year, with which core inflation went from 0.4% to 0.8%, the highest level since last January.

The data

Certainties. The instability of the economy China It has also hurt the price of some international commodities, such as copper and oil.