November 2024 inflation data is due from China today, and it comes in the context of weak Consumer Price Index (CPI) and deflationary Producer Price Index (PPI).
In October, China's CPI increased by 0.3% year-on-year, slightly down from September's 0.4% rise. This marked the ninth consecutive month of consumer inflation (rather than deflation), with October's figure being the lowest since June. On a monthly basis, the CPI declined by 0.3%, following a flat reading in September.
The Producer Price Index (PPI), which reflects factory gate prices, fell by 2.9% year-on-year in October, deepening from a 2.8% decline in September. This represented the 25th consecutive month of PPI contraction, indicating persistent deflationary pressures in the industrial sector.
These figures highlight ongoing deflationary trends in China's economy, characterized by:
- weak domestic demand
- and declining prices across various sectors.
Despite government stimulus efforts, including a substantial package aimed at alleviating local government debt burdens, consumer and producer prices continue to face downward pressure.
The prolonged deflationary environment poses challenges such as
- reduced corporate profits,
- potential wage stagnation,
- and increased real debt burdens,
which could further dampen economic growth. Analysts suggest that without significant policy interventions to boost domestic demand and consumer confidence, deflationary pressures may persist, potentially leading to a deflationary spira
In summary, the CPI and PPI data are expected to continue to reflect China's ongoing struggle with deflation, underscoring the need for more robust measures to stimulate the economy and counteract these trends.
