China's deflationary problems worsened in September, with consumer prices still weak and factory gate prices continuing to fall.

The consumer price index increased 0.4 per cent from the past year, though it was pushed into positive territory only by a spike in fresh vegetable prices. Core CPI rose 0.1 per cent in September, the smallest since February 2021, while producer inflation decreased for the 24th month in a row, according to National Bureau of Statistics data released on Sunday. Producer inflation decreased by 2.8 per cent, year-over-year, slightly higher than economists had predicted a fall of 2.6 per cent.

Food inflation surged by 3.3 per cent in September compared with the same period last year, and fresh vegetable prices climbed 22.9 per cent after advancing 21.8 per cent in August, boosting inflation by 0.48 percentage points. Weather conditions and seasonal demand ahead of a week-long holiday in China most probably led to increased fruit and vegetable prices.

The figures underscore the weakness of domestic demand before policymakers implemented a series of stimulus measures in late September to revive the economy. China is suffering its longest period of deflation since the 1990s, with a broad gauge of economy-wide prices falling for five consecutive quarters through June — a trend that likely continued through September.

Beijing has set interest rates lower and backed the property and stock markets since late September. The Finance Ministry promised further aid for the ailing property sector and indebted local governments.

“The overall inflation is still significantly lower than the policy target and demand is still weak,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc. “With the effective implementation of existing policies and the launch of new measures, it is expected that consumer and producer confidence and expectations will be effectively boosted with market demand gradually recovering.”

In sectors like solar and electric vehicles, weak consumption and a rapid rise in output have unleashed fierce price wars. Prices of so-called transportation facilities, including cars, dropped 5.3 per cent, while automobile manufacturers saw their sale prices decline 2.3 per cent.

Declining prices are worrying since they may lead to a vicious cycle of lower spending and investment because it tends to result in a slower economy and high unemployment.

This article includes reporting from Bloomberg.

China's deflationary problems worsened in September, with consumer prices still weak and factory gate prices continuing to fall. The consumer price index increased 0.

China's deflationary problems worsened in September, with consumer prices still weak and factory gate prices continuing to fall. The consumer price index increased 0.4 per cent from the past year, though it was pushed into positive territory only by a spike in fresh vegetable prices. Core CPI rose 0.1 per cent in September, the smallest since February 2021, while producer inflation decreased for the 24th month in a row, according to National Bureau of Statistics data released on Sunday. Producer inflation decreased by 2.8 per cent, year-over-year, slightly higher than economists had predicted a fall of 2.6 per cent. Food inflation surged by 3.3 per cent in September compared with the same period last year, and fresh vegetable prices climbed 22.9 per cent after advancing 21.8 per cent in August, boosting inflation by 0.48 percentage points. Weather conditions and seasonal demand ahead of a week-long holiday in China most probably led to increased fruit and vegetable prices. The figures underscore the weakness of domestic demand before policymakers implemented a series of stimulus measures in late September to revive the economy. China is suffering its longest period of deflation since the 1990s, with a broad gauge of economy-wide prices falling for five consecutive quarters through June — a trend that likely continued through September. Beijing has set interest rates lower and backed the property and stock markets since late September. The Finance Ministry promised further aid for the ailing property sector and indebted local governments. “The overall inflation is still significantly lower than the policy target and demand is still weak,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc. “With the effective implementation of existing policies and the launch of new measures, it is expected that consumer and producer confidence and expectations will be effectively boosted with market demand gradually recovering.” In sectors like solar and electric vehicles, weak consumption and a rapid rise in output have unleashed fierce price wars. Prices of so-called transportation facilities, including cars, dropped 5.3 per cent, while automobile manufacturers saw their sale prices decline 2.3 per cent. Declining prices are worrying since they may lead to a vicious cycle of lower spending and investment because it tends to result in a slower economy and high unemployment. This article includes reporting from Bloomberg.

China's deflation deepens on weak consumer prices

Discount retailers in China are thriving amid shifting retail landscape.&nbsp;

This price war is driven by a lack of consumer confidence, with many facing a tough economic outlook.&nbsp;

While cheap options are good for budget shoppers, economists warn of deflation.&nbsp;

As retailers cut prices, they squeeze suppliers for lower costs, which could lead to stagnant wages and ultimately, less consumer spending.&nbsp;

This is the same worry of Japan's decades long deflation.&nbsp;

China’s may inflation data is expected to rise slightly. But analysts think it’s hiding deeper deflation.&nbsp;

The price war is not limited to certain sectors. Chinese car makers are in a two-year price war.&nbsp;

Since some traders rely on extreme methods like zero-down payment and zero-interest loans.&nbsp;

This disappointment reflects weak domestic demand.&nbsp;

Even giants like Starbucks are not immune. Their China revenues fell 8 per cent, hurt by tough competition from low-priced coffee chains.&nbsp;

Alibaba and JD are facing pressure from up-and-comers. They reported slower revenue growth relative to discount retailers.&nbsp;

To compete, both companies also have plans of their own - extended selling times and price guarantees. In contrast, the discount retailers are now seeing hypergrowth.&nbsp;

Nonetheless, it will hinge on higher wages and the rate at which jobs are created in other sectors to counterbalance potential job loss due to price wars.&nbsp;

Experts warn that a prolonged price war could hamper China's economy and exacerbate deflation.&nbsp;

Discount retailers in China are thriving amid shifting retail landscape. This price war is driven by a lack of consumer confidence, with many facing a tough economic outlook.

Discount retailers in China are thriving amid shifting retail landscape. This price war is driven by a lack of consumer confidence, with many facing a tough economic outlook. While cheap options are good for budget shoppers, economists warn of deflation. As retailers cut prices, they squeeze suppliers for lower costs, which could lead to stagnant wages and ultimately, less consumer spending. This is the same worry of Japan's decades long deflation. China’s may inflation data is expected to rise slightly. But analysts think it’s hiding deeper deflation. The price war is not limited to certain sectors. Chinese car makers are in a two-year price war. Since some traders rely on extreme methods like zero-down payment and zero-interest loans. This disappointment reflects weak domestic demand. Even giants like Starbucks are not immune. Their China revenues fell 8 per cent, hurt by tough competition from low-priced coffee chains. Alibaba and JD are facing pressure from up-and-comers. They reported slower revenue growth relative to discount retailers. To compete, both companies also have plans of their own - extended selling times and price guarantees. In contrast, the discount retailers are now seeing hypergrowth. Nonetheless, it will hinge on higher wages and the rate at which jobs are created in other sectors to counterbalance potential job loss due to price wars. Experts warn that a prolonged price war could hamper China's economy and exacerbate deflation.

Economists warn of deflationary cycle in China's consumer market

China's consumer prices saw a second consecutive monthly increase in March, while factory price deflation continued, indicating that the economy, though showing signs of improvement, still faces challenges. <o:p></o:p>

The National Bureau of Statistics (NBS) revealed that the Consumer Price Index (CPI) rose by 0.1 per cent year-on-year in March, following a 0.7 per cent uptick in February. <o:p></o:p>

This was the first gain in six months and surpassed the 0.4 per cent increase predicted by economists in a Reuters poll.<o:p></o:p>

However, the monthly comparison paints a less optimistic picture, as the CPI fell by 1.0 per cent from the previous month. <o:p></o:p>

This cooling is sharper than the 1 per cent gain seen in February and worse than the 0.5 per cent decline forecasted by economists.<o:p></o:p>

On the other hand, the Producer Price Index (PPI) continued its downward trend, falling by 2.8 per cent year-on-year in March, compared to a 2.7 per cent decline in the previous month. <o:p></o:p>

Factory-gate prices have been on the decline for the past year and a half, with companies reducing selling prices to sustain sales amid falling commodity prices.<o:p></o:p>

Although the government has made efforts to stimulate household spending, including relaxed car loan regulations, consumers remain wary of major purchases due to concerns about the weakening economy and the subdued job market. <o:p></o:p>

The central bank of China has recently said that it would take measures to intensify efforts to strengthen domestic demand and enhance confidence in the economy.<o:p></o:p>

Core inflation, which excludes volatile food and energy prices, stood at 0.6 per cent year-on-year in March, a deceleration from 1.2 per cent in February, further highlighting the subdued demand conditions in the country.<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

China's consumer prices saw a second consecutive monthly increase in March, while factory price deflation continued, indicating that the economy, though showing signs of improvement, still faces challenges.

China's consumer prices saw a second consecutive monthly increase in March, while factory price deflation continued, indicating that the economy, though showing signs of improvement, still faces challenges. The National Bureau of Statistics (NBS) revealed that the Consumer Price Index (CPI) rose by 0.1 per cent year-on-year in March, following a 0.7 per cent uptick in February. This was the first gain in six months and surpassed the 0.4 per cent increase predicted by economists in a Reuters poll. However, the monthly comparison paints a less optimistic picture, as the CPI fell by 1.0 per cent from the previous month. This cooling is sharper than the 1 per cent gain seen in February and worse than the 0.5 per cent decline forecasted by economists. On the other hand, the Producer Price Index (PPI) continued its downward trend, falling by 2.8 per cent year-on-year in March, compared to a 2.7 per cent decline in the previous month. Factory-gate prices have been on the decline for the past year and a half, with companies reducing selling prices to sustain sales amid falling commodity prices. Although the government has made efforts to stimulate household spending, including relaxed car loan regulations, consumers remain wary of major purchases due to concerns about the weakening economy and the subdued job market. The central bank of China has recently said that it would take measures to intensify efforts to strengthen domestic demand and enhance confidence in the economy. Core inflation, which excludes volatile food and energy prices, stood at 0.6 per cent year-on-year in March, a deceleration from 1.2 per cent in February, further highlighting the subdued demand conditions in the country. (With inputs from Reuters)

China's consumer prices rise for second consecutive month, factory deflation continues