Jul 10, 2023, 9:32am EDT
businessEast Asia

What it means: China on the verge of consumer deflation

REUTERS/Tingshu Wang/File Photo

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The News

China’s consumer inflation rate flattened to zero last month — sparking fears that the country is on the precipice of deflation.

Producer prices fell at their fastest pace in over seven years in June, according to data published Monday from China’s National Bureau of Statistics — indicating that there is both weak demand abroad and at home.

The worse-than-expected economic indicators may force authorities to release a significant economic stimulus package, which they have so far resisted.

We’ve curated insights on what the latest figures mean for the world’s second largest economy.

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  • Economists believe that Monday’s data calls for more “policy easing,” which policymakers in China are already doing. The central bank, for example, cut a key policy interest rate last month by a small amount, and the government has also extended tax breaks for buyers of electric vehicles. — Bloomberg
  • The last time China endured a period of deflation, global central banks slashed interest rates, helping bolster Beijing’s own response, ANZ bank’s chief economist said. “Those global events also brought synchronized global easing, which China benefitted from,” Richard Yetsenga tweeted.