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China consumer prices fall for first time

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China consumer prices

BEIJING: According to official data released Wednesday, China consumer prices fell more than anticipated in November on falling food costs, with a key gauge turning negative for the first time in 11 years because of pork prices.

According to Beijing’s National Bureau of Statistics, the consumer price index (CPI), a primary gauge of retail inflation. It dropped 0.5% year-on-year due to a strong comparative base in the same period last year.

This continued a recent slide led by lower pork prices. It is a staple meat in the world’s second-largest economy whose prices rocketed after stocks were devastated by an African swine fever outbreak.

Pork prices plunged 12.5%, widening the fall in October and dragging down the headline figure, while prices for other food products. For example,  such as eggs, chicken and duck also saw a slide compared to last year.

Core CPI “continued to remain stable”

But official data showed that the core CPI, which strips out food and energy prices, “continued to remain stable”. It is rising 0.5% from a year ago.

Julian Evans-Pritchard, China’s senior economist at Capital Economics, said the November headline figure was almost entirely driven by improvements in the supply of pork and is not evidence of faltering demand.”

“By contrast, on the back of the improvement in economic activity, wider price pressures are beginning to pick up”. He said.

However with the producer price index (PPI) down 1.5% on the year last month, there was an increase in factory-gate prices. It is a smaller decline than the 1.8% drop predicted by a Bloomberg analyst survey.

In November, NBS senior statistician Dong Lijuan said “market demand continued to increase. And the prices of industrial products continued to rise.”

PPI tests the cost of products at the factory gate, and the coronavirus fallout has weighed down costs.

Tommy Xie, head of Greater China research at OCBC Bank told AFP: “The enhancement of PPI certainly reinforces the expectation that the Chinese (economic recovery is on track.”

 

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