Consumer prices in China fell in November for the first time in more than a decade, although economists say this decline is not a sign of falling demand in the world’s second-largest economy.
China’s consumer price index fell 0.5% year-on-year in November, according to the National Bureau of Statistics on Wednesday, after a 0.5% increase in October. This is the first negative opinion since October 2009. Economists questioned by the Wall Street Journal predicted that the CPI would reach a flat level in November.
The Statistical Office reported that food prices, which fell by 2.0% year-on-year, had a strong impact on the CPI in November. In October, food prices rose by 2.2% year-on-year.
Among food products, pork, the main source of protein in the Chinese diet, continued to decline and fell by 12.5% in November, following a 2.8% decline in October.
Outbreaks of African swine fever, a highly contagious virus that kills pigs but is not harmful to humans, have led to a halving of the pig population by 2019, more than doubling the price of pork.
Pork prices have been volatile this year, but tend to fall as increased imports – not only of pork, but also of meat such as beef and mutton – have compensated for the shortage on the internal market.
The fall in CPI in November was caused by pork prices and is expected to be short-lived, which is not considered deflation, said Xin Zhopeng, an ANZ economist.
Xing added that three or more consecutive monthly falls in consumer prices would be considered a risk of deflation, but CPI inflation in China is expected to turn positive in the coming months: This sudden rise is typical of the New Year’s approach. Next year it will be cancelled in February.
China’s CPI fell 0.6% in November compared to the previous month, the second largest monthly decline according to official data. Core consumer price inflation, which eliminated food and energy price volatility, was maintained at 0.5% for the fifth consecutive month.
The decline in the factory price slowed down in November: The producer price index fell by 1.5% year-on-year, compared with a fall of 2.1% in October. Compared to the previous month, the PPI increased by 0.5% due to the recent recovery of industrial raw material prices and stronger demand.
In November, China’s exports increased significantly, resulting in a record trade surplus.
Sustained external demand and domestic investment in infrastructure should boost demand for industrial goods and increase PPI in the coming months, according to economists.
Given the recent volatility of food and energy prices, inflation rates are not as pleasant as they seem, he said.
an economist from the capital sector.
He said the latest inflation figures do not prevent the Chinese central bank from tightening monetary policy next year, as core inflation is expected to increase in the coming months while economic activity remains at a high level.
-Grice Zhu has contributed to this article.
Write to Erin Mendell at [email protected].
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