Negative inflation indicates bad forecasts for the immediate future
The main indicator of inflation in China, the consumer price index (CPI), contracted by 0.5% year-on-year in November, marking its first decline since October 2009, pressured by the price of pork, according to data published today by the National Statistics Office (ONE).
For their part, prices in China’s factories fell at a slower pace in November, adding to signs that the world’s second-largest economy is recovering from the Covid 19 pandemic.
In October, the CPI had already registered its smallest advance in 11 years, 0.5%, mainly due to the fall, for the first time after 19 months of increases, in pork prices.
The recovery of the national herd after the swine fever epidemic, which since mid-2018 caused the death of tens of millions of pigs in China and caused serious production problems, has caused great volatility in the prices of this meat since then.
And if in October that first fall had been 2.8% year-on-year, in November the drop was much higher, 12.5%.
Pig meat prices had appreciated 25.5% in September and 52.6% in August.
Overall, food prices fell 2% in November after rising 2.2% in October, the first decline since January 2018.
Meanwhile, the prices of other types of products also included in the CPI fell by 0.1%.
The ONE also released the producer price index (PPI), which in November marked its smallest drop since March, dropping 1.5%. The drop was less than the 1.8% drop expected in a Reuters poll and also more moderate than the 2.1% drop in October.
In the comparison with the previous month, wholesale prices rose by 0.5%, which represents a return to the month-on-month expansion after they registered no change in October.