China Inflation Slows as Economy Cools, But No Deflation Yet
-
China is not experiencing 'deflation' despite negative inflation readings. Low inflation reflects weak domestic demand.
-
Factory-gate prices declined for the first time in 4 months, reflecting lower energy prices and base effects.
-
Core inflation declined for the first time in 4 months, adding to signs of economic slowdown.
-
As base effects ease, CPI inflation should rise to around 1% in 2024. PPI deflation should also moderate.
-
Domestic demand is gaining steam. As it builds, CPI inflation should increase to 2.5% by end of 2024.