Consumer prices fell in China last month for the first time in 13 months, as persistent weak demand was compounded by the early timing of the Lunar New Year holiday.
The Chinese National Bureau of Statistics yesterday said that its consumer price index dropped 0.7 percent last month compared with a year ago. On a monthly basis, prices were down 0.2 percent from January.
While many other countries wrestle with inflation, China’s policymakers face flat to falling prices, and the possibility they could evolve into a deflationary spiral that would drag down the economy.
Photo: AFP
Last week, Beijing stressed the need to increase domestic demand and consumer spending in an annual report to its ceremonial legislature, the Chinese National People’s Congress, but held back on unveiling any dramatic new steps to boost the economy.
The Lunar New Year holiday, a time when spending rises for travel, dining out and entertainment, came in late January this year. Holiday spending helped drive the consumer price index up 0.5 percent in January, but it fell last month compared with last year’s elevated level.
Factoring out the impact of the holiday, the index rose 0.1 percent last month, Chinese National Bureau of Statistics statistician Dong Lijuan (董莉娟) said in a written analysis.
That is still far lower than ideal. Last week’s government annual report included an inflation target of 2 percent for this year, but it is likely to fall far short of that goal. The consumer price index was flat last year, rising 0.2 percent.
A burgeoning trade war with the US could add to China’s economic headwinds.
Besides the early Lunar New Year holiday, two other factors contributed to falling prices last month: Better weather boosted farm production, driving down the price of fresh vegetables, and automakers also stepped up promotions to try to boost sales, reducing prices for new cars, Dong said.
The producer price index, which measures the wholesale price of goods, fell 2.2 percent last month, the statistics bureau said.
Producer prices have been falling more sharply than consumer prices, putting pressure on companies to cut labor and other costs.
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