Chinese consumers are experiencing “luxury shame” similar to what happened in the U.S. during the 2008-09 financial crisis, according to a June Bain and Company report.
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China’s consumer inflation rose less than expected in January while the deflation in producer prices persisted, in a sign of continued deflationary pressure in the absence of stronger stimulus.
The consumer price index rose 0.2% in January from a year earlier, China’s National Bureau of Statistics data showed on Wednesday, below economists’ forecast of 0.4% increase in a Reuters poll. That followed a 0.8% growth in December, its highest level in nearly three years.
Prices rose 0.2% month-on-month, below economists’ forecast of a 0.3% increase.
Core CPI, which strips out volatile food and energy prices, jumped 0.8% from a year earlier, easing from the 1.2% in December.
China’s producer price index declined 1.4% from a year ago, better than economists’ expectations of a 1.5% drop, official data showed, moderating from a 1.9% drop in December.
The deflation in factory-gate prices has persisted for more than three years, weighing on the profitability of manufacturers who have weathered tepid consumer confidence and production disruptions stemming from U.S. trade policies for much of last year.
The world’s second-largest economy grew 5% last year, in line with Beijing’s official target, thanks to resilient export growth to non-U.S. markets.
China has struggled to shake deflationary pressure since the end of the pandemic, weighed down by a prolonged property downturn and uncertain job-market prospects. Authorities have sought to curb price wars across industries, where overcapacity has fueled a glut of goods and forced companies to cut prices.
Top policymakers are expected to unveil economic targets for the year at a parliamentary meeting next month.
In a policy report on Tuesday, the People’s Bank of China reiterated its determination to implement “appropriately loose” monetary policies to shore up the economy and guide prices towards “a reasonable recovery.”
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