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Consumer Price Slump in China
China's consumer prices took a tumble at a record pace, experiencing the most significant drop in three years this November. This downward movement points to escalating deflationary pressures as domestic demand remains uncertain, compromising economic recovery efforts.
Statistics Showing the Decline
Data from the National Bureau of Statistics (NBS) revealed this Saturday that the consumer price index (CPI) declined by 0.5% in comparison to last year and October's readings. These figures outstrip the average projections from a Reuters survey, anticipating a 0.1% deduction year-over-year and month-on-month. The annual CPI drop was the most pronounced since November 2020.
Indicator for Policy Support
These statistics echo recent uneven, trade data, and manufacturing studies that have sustained calls for increased policy backing to bolster growth. Senior Economist at the Economist Intelligence Unit, Xu Tianchen, stressed that these numbers could worry policymakers and identified the decrease in global energy prices, the decline after the winter travel peak, and chronic supply surplus as the main factors contributing to the downward pressures.
Inflation and the Concern for Balanced Growth
Year-by-year core inflation, excluding the prices of food and fuel, remained at 0.6%, the same as in October. Bruce Pang, Chief Economist at Jones Lang Lasalle, indicated that the weak overall CPI underlines the persistent lack of demand, insisting its resolution should be a policy focus for China to establish stable and balanced growth.
China's Economic Struggles
China's economy has been up against numerous challenges this year, with growing local government debt, a struggling real estate market and subpar demand domestically and internationally. There has been notable financial conservatism among Chinese consumers as a result of uncertainties in the economic resurgence.
Outlooks for China's Economic Recovery
Despite the struggles, the authorities are aiming to ignite domestic demand and boost the economic renewal in 2024, and markets are awaiting further government stimulus at the "Central Economic Work Conference" later this month.
