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Why low inflation in China is no cause for applause
The consumer price index is so weak now it barely registers, and that is a sign of trouble.
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An interest-rate cut in China is in order, if only to send a signal that officials are on the case, says the writer.
PHOTO: REUTERS
Daniel Moss
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To the disappointments of China’s recovery, add inflation. Rather than accelerating quickly with the dismantling of pandemic rules, as was the case in most big economies, prices are quiescent. Too much so. The dissonance points to deep challenges beneath the respectable headline growth numbers in the world’s second-largest economy. That is not good news for anyone.
Inflation barely had a pulse in April. Consumer prices rose a mere 0.1 per cent from a year earlier, the government reported on Thursday. That was the lowest in two years and below economists’ forecasts. The news was even worse when it came to the factory gate. Producer prices tumbled 3.6 per cent, reflecting, at least partly, softer commodity costs. This number is not a one-time problem: the consumer price index (CPI) has been retreating since the start of the year.
