China’s consumer deflation extended for a third month last month, as punitive tariffs imposed by the US add to a drag on prices from weak domestic demand.
The consumer price index fell 0.1 percent from a year earlier, the Chinese National Bureau of Statistics said on Saturday, similar to the drop in the previous month.
Factory deflation persisted for a 31st month, with the producer price index recording a decline of 2.7 percent compared with 2.5 percent in March.
Photo: EPA-EFE
Deflationary pressures are likely to linger and possibly get worse after US President Donald Trump took aim at most Chinese exports with a 145 percent tariff last month, provoking Beijing to retaliate in kind. The trade war could encourage some companies to offload their products at home, exacerbating already-fierce competition that might push firms to lower prices even further.
“Policy efforts to boost consumption since the fourth quarter of last year still appear to be failing to get much traction,” Bloomberg Economics economist David Qu (曲天石) wrote in a note on Saturday. “The key will be for the government to increase fiscal support quickly — especially if negotiations with the US fail to bring material relief on tariffs.”
Losses in jobs and incomes due to US tariffs might also weaken the ability and willingness of Chinese consumers to spend, likely prompting manufacturers and service providers to cut prices.
China’s economy continued to struggle from deflation in the first first three months of the year, reflecting an imbalance between supply and demand.
The GDP deflator — a broad measure of prices across the economy — declined for the eighth consecutive quarter, the longest streak since the quarterly data began in 1993.
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