Negative inflation worsened in China

reported by %20%0A

This month, producer inflation fell 2.8 percent year-on-year, slightly more than the 2.6 percent decline expected by economists. The consumer price index in China has only increased by 0.4 percent compared to last year, and this jump has only reached above zero due to the jump in the price of fresh vegetables.

Overall food inflation rose 3.3 percent in September from a year earlier, while vegetable prices rose 21.8 percent in the month August, increased by 22.9 percent and increased inflation by 0.48 percentage points. Unfavorable weather and seasonal demand on the eve of a week-long holiday in China was probably the main reason for the increase in the price of fruits and vegetables.

The figures reflect weak domestic demand as policymakers in late September began a series of stimulus measures to revive the economy. China has faced its longest run of negative inflation since the 1990s, with broad-based deflation across the economy for five consecutive quarters through June, a trend likely to continue into September.

Beijing has cut interest rates since late September and boosted support for real estate and stock markets. On Saturday, the Finance Ministry promised more aid to the real estate sector and indebted local governments. According to economists, headline inflation is still significantly below the policy target and demand remains weak. But with the effective implementation of existing policies and the implementation of new measures, it is expected that consumer and producer confidence and expectations will increase effectively with the gradual improvement of market demand.

Weak consumption and rapid increase in production have led to intense price wars in various sectors, including electric cars and solar energy. The price of transportation facilities, including cars, has decreased by 5.3 percent, while car manufacturers saw a 2.3 percent decrease in their sales prices.

Decreasing prices are a bad sign for the economy. Inflation can lead to a vicious cycle by reducing spending and investment, which in turn leads to weaker economic growth and higher unemployment.