Average CPI over the year so far has been 0.5%, severely lagging the government’s target average inflation rate of 3%.
According to the National Bureau of Statistics (NBS), the world's second-largest economy saw its consumer price index fall by 0.3% in annual terms in July. Meanwhile, factory gate prices saw further declines, falling by 4.4%.
Consumer prices last slipped into negative territory in February 2021, and fears have run high this year of re-entering as an expected rebound in consumer spending failed to materialise after authorities lifted pandemic restrictions at the beginning of this 2023.
Average CPI over the year so far has been 0.5%, severely lagging the government's target average inflation rate of 3%.
China's reopening brings optimism but investors remain wary
Capital Beijing's GDP growth target of 5% — the lowest in decades — had been initially seen as cautious but months on consistently weak figures have heightened anxieties over the country's growth outlook.
Now that deflation has been reported, there will be increased pressure for more government stimulus, which comes at a time when policymakers are also tackling a property sector slowdown and trade weakness.
Tom Hopkins, portfolio manager at BRI Wealth Management, said: «China moving into a deflationary state bucks the trend of most Western nations, which have been struggling with the opposite problem of high inflation.
»The move into deflation for the world's second-largest economy is a clear sign of weakening, something that will spark concern for EU companies and economies of which China is one of the most important trading partners.
«In addition, a lack of clarity on Beijing's planned stimulus measures will mean a mixed appetite for European
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