Chinese consumers are experiencing “luxury shame” similar to what happened in the United States during the 2008-09 financial crisis, according to a report by June Bain and Company.
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China’s consumer price inflation rose less than expected in January while producer price deflation persisted, a sign of continued deflationary pressure in the absence of stronger stimulus measures.
The consumer price index rose 0.2% in January from a year earlier, data from China’s National Bureau of Statistics showed on Wednesday, below economists’ forecast of a 0.4% rise in a Reuters poll. This followed a Growth of 0.8% in Decemberits highest level in almost three years.
Prices rose 0.2% month-on-month, below economists’ forecasts of a 0.3% increase.
The core CPI, which excludes volatile food and energy prices, jumped 0.8% year-on-year, up from 1.2% in December.
China’s producer price index fell 1.4% from last year, better than economists had expected a 1.5% drop, official data showed. Drop of 1.9% in December. On a monthly basis, producer inflation rose 0.4%, improving for a fourth consecutive month, partly driven by the surge in global gold prices in recent months.
Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, said the data was skewed by the timing of the Lunar New Year, which falls in mid-February this year after taking place in January last year.
“This mismatch makes it difficult to interpret macroeconomic data,” Zhang said.
Ex-factory price deflation has persisted for more than three years, weighing on the profitability of manufacturers who weathered lukewarm consumer confidence and production disruptions stemming from U.S. trade policy 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 growth in exports to non-U.S. markets.
China has struggled to shake off deflationary pressures since the end of the pandemic, weighed down by a prolonged housing downturn and an uncertain labor market outlook. Authorities have sought to curb the price war across all sectors, where overcapacity has fueled a glut of goods and forced companies to cut prices.
Top policymakers are expected to unveil their 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 monetary policies that are “loose enough” to support the economy and guide prices toward “a reasonable recovery.”