Last month, the Chinese market slipped into deflation, and it was the first time in 2 years. According to the main gauge of inflation of the Consumer Price Index, it went down 0.3 points in July!
According to the National Bureau of Statistics reports, the inflation point flat-lined in June. It is bad news, especially when domestic spending has slowed down considerably. It was in early 2021 that the data of July reported negative inflation!
After the Covid-19 pandemic, the prices of the products became weaker; one such example was the decrease in pork prices. Based on a survey, analysts have informed that they anticipate a 0.4 percent decline yearly!
The economy has been severely impacted in China after Covid-19, especially when the country’s imports and exports have been constantly deteriorating. Chinese products are seeing a fall in demand on a global scale, further contributing to the economic crisis of the country.
Chinese retailers are cutting prices due to a slowdown in product demand. The retailers have stocked up on products they thought would be in demand in the market, but now, with the slow sales, they are trying to finish off the stock by selling them at a low price.
It is a well-known fact that the factories in China have always charged less for their goods. However, with the decreasing demand for the commodity, they are also facing serious challenges in the economic market.
There has been high youth unemployment and weak housing and real estate market; therefore, manufacturers and consumers are trying to be aware and cautious. Authorities across China have downplayed the deflation by giving hope that there would not be any deflation.
The deputy governor of the central bank, Liu Guoquiang, informed in July that there is no risk of deflation in China yet, and there is a decreased rate of foreign investors in China. The government has established a target of 3 percent of consumer inflation!
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