The consumer prices in China have taken a dip for the first time in more than two years as slowing spending continues to form clogs in the wheels of the economy’s post-pandemic recovery.
Figures from the National Bureau of Statistics showed on Wednesday that the Chinese economy slipped into deflation as the Consumer Price Index (CPI) declined by 0.3 percent in July after remaining flat the previous month.
The recent decrease in prices is a worrisome indication for the world’s second-largest economy. This comes after a decline in exports last month, which dropped by 14.5 percent. This is the third consecutive decline and the biggest drop seen in three years.
Africa Today News, New York recalls that China briefly experienced deflation in late 2020 and early 2021, when pork prices collapsed across the country.
Deflation is generally viewed negatively by economists as lower prices typically lead to lower consumer spending and reduced production, in turn causing layoffs and salary cuts.
Read Also: Debt-Trap: Is Africa Trading Off It’s Sovereignty To China?
China’s economy has slowed amid weakening demand at home and overseas after a swift rebound from COVID-19 and tough pandemic curbs at the start of the year.
Beijing has announced a raft of policy measures to prop up the economy, including greater support for private enterprise, with more policies expected to be rolled out in the coming weeks.
On Wednesday, the National Bureau of Statistics announced that the average consumer price inflation for the year so far is only 0.5%, which is significantly lower than the government’s target average inflation rate of 3% for the year. This emphasizes the increasing difference between expectations and the actual situation.
Beijing’s gross domestic product growth target of 5 per cent for 2023, the lowest in decades, was originally seen as cautious, but months of consistently weak data have fuelled wider pessimism over the growth outlook.
The economy only grew by 0.8% from the first to the second quarter of the year. According to recent data released on Tuesday, July’s exports experienced a significant decline of 14.5% compared to the previous year, which is the biggest drop since the pandemic began. Meanwhile, imports also decreased by 12.4% compared to the previous year, which is the most significant decrease since January.