China: Disinflation and Deflation Continue

October 15th, 2012
in econ_news, syndication

Econintersect:  The CPI (Consumer Price Index) for China was 1.9% higher than a year ago in September, slightly lower than August's reading of 2.0% breaking-news-130pxand slightly higher than July's 1.8%.  The PPI (Producer Price Index) for finished manufactured goods declined 3.6% year-over-year.  This was only slightly below the -3.5% number for August but was the seventh month in a row of PPI deflation.  The last time that PPI was positive was January when it registered +0.7% year-over-year.   These inflation numbers were probably not imagined by many in the middle of 2011 when CPI hit 6.5% and PPI was at 7.5%.

Follow up:

Other Chinese economic news had export growth firming but import growth at an unusually low level.  Over the week-end China announced that September exports were up 9.9% year-over-year, but import growth was only 2.4%.  Both numbers were much stronger than August when exports were up only 2.7% and imports declined by 2.6%.

Some quotes from the Financial Times:

“Today’s inflation data, together with some forward-looking activity data, suggest the slack in the economy remains large,” said Liu Ligang of ANZ.

Lu Ting of Bank of America Merrill Lynch said: “Muted inflation pressure will provide more room for the government to introduce additional policy easing and stimulus measures.”

John Lounsbury


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