2023-08-09 02:27:10
The Chinese economy has slipped into deflation: As the statistics office in Beijing announced on Wednesday, consumer prices fell by 0.3 percent in July compared to the previous year. As early as June, prices had only stagnated after having risen slightly by 0.2 percent in May.
Producer prices were down for the tenth straight month, falling 4.4 percent year-on-year in July. Producer prices are the prices that manufacturers charge for their products.
It is the first time since November 2020 that both consumer and producer prices have fallen in China.
Deflation is the opposite of inflation and denotes a fall in the general level of prices. Most economists consider prolonged deflation to be more dangerous for the development of an economy than slightly rising prices. At first glance, consumers benefit because they have to pay less for goods and services. However, deflation usually also puts pressure on company profits and thus harbors the risk of wage cuts or layoffs, for example.
Experts attribute the drop in prices in China to the persistently weak consumer demand and problems in the real estate market, among other things. After the end of the corona pandemic, the Chinese economy is recovering more slowly than most economists expected.
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