China’s consumer price index dropped in November for the first time in a decade as food prices plummeted.
The consumer price index, which is a measure of inflation in terms of basket prices for consumer goods and services, fell 0.5% in November since last year, China’s National Bureau of Statistics said on Wednesday.
Markings are the first drop since October 2009, according to the Wind Information database.
Food prices have dropped by 2% as pork prices have fallen by 12.5% in November since last year.
The decline in Chinese meat prices follows an increase last year due to a shortage of pork due to the outbreak of African swine flu.
The sharp rise in pork prices over the past three months of 2019 makes November’s decline meaningless, China’s chief economist in Nomura said in an email. “A negative inflation (annually) does not mean China’s decline,” he said.
Economists were not expecting a major change in monetary policy from the People’s Bank of China due to the decline in CPI.
The so-called core CPI – which excludes food and energy prices – rose 0.5% in November from last year. Prices for medical care have risen by 1.5%, while education, cultural services and entertainment have risen by 1%, according to the statistics office.
The producer price index, which measures prices and services from a retailer’s perspective, fell by 1.5% in November from last year. That was 0.6 percent points down compared to the October figure, the league said.
“The underlying economy is strong given the decline in PPI,” Larry Hu, a Chinese economist at Macquarie, said in an email. As a result, he expects China’s largest bank to look beyond the general decline in consumer prices and to focus on lowering certain pressures.
COVID’s Impact On China
The Chinese economy crashed earlier this year due to a coronavirus outbreak. While growth has gained momentum, consumers are still under pressure. Consumer prices for baskets of consumer goods fell by 2.1% in the first three quarters of the year, according to a “China Shopper Report” released last week by a survey of companies consulting Bain and Kantar Worldpanel. The decline comes as volume has grown by 2% from the previous year.
“Because of Covid’s uncertainty and people’s uncertainty about their lost income, there is a tendency to get more money,” said Derek Deng, Bain’s partner and co-author of the report, a telephone interview said Wednesday. “Also, to close losses during the first half of the year, many types of products and categories increase (d) their rate of increase.”
China’s consumer price index (CPI) declined in November for the first time in a decade as food prices plummeted.
Economists point out that the decline is unintentional due to the increase late last year in pork prices.
In addition to food and energy prices, the so-called core CPI increased by 0.5% in November from last year.