Inflation News From China Tells a Sorry Tale
Deflation at the factory gate reveals serious and fundamental economic distortions
China’s latest inflation figures should keep the authorities in Beijing awake at night. The complete lack of consumer inflation announces that Chinese consumers have deeper problems than the property crisis, bad as that is. At the same time, declining producer prices announce that in addition to consumer problems, the planners in Beijing have made matters worse by distorting China’s economy.
The latest price figures from Beijing’s National Bureau of Statistics make for troubling reading. Consumer prices rose by a mere 0.2 percent in June from levels a year ago. This result was far below the consensus expectation for a 0.4 percent rise and even May’s 0.3 percent rise. For countries suffering from inflation, such figures might be welcome, but in an economy like China’s that needs desperately to stimulate consumer spending, it speaks to failure. ---More...
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