As the Chinese economy continues its downward spiral, consumer prices in China are stalling again.
In December, prices remained in deflationary territory for the third consecutive month.
This comes as the superpower tries to recover from the impact of the coronavirus pandemic.
However, official figures released on Friday showed the country’s consumer price index fell 0.3% year-on-year in December, while producer prices fell 2.7%.
China aims to recover from the impact of the coronavirus pandemic
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China’s economy suffered from deflation in July, and prices have been flat or falling in every month since then except August. The index fell by 0.5% in November, the largest drop in three years.
However, deflation is just one of the economic challenges facing the Chinese government.
President Xi Jinping’s government has sought to ease key lending rates to counter a prolonged slump in the real estate sector, which typically accounts for more than a quarter of economic activity.
It comes as the country’s strict anti-pandemic policies continue to have a negative impact on fragile consumer sentiment, despite being lifted more than a year ago.
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China’s producer price index, which reflects factory prices and is strongly influenced by global costs of raw materials and goods, has been declining every month since October 2022.
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Meanwhile, China’s producer price index reflects factory prices and is strongly influenced by the cost of raw materials and primary products around the world, and has been declining every month since October 2022.
Shadow banking conglomerate Zhongzhi declared bankruptcy last week, six months after missing payments were discovered.
The People’s Bank of China is expected to cut medium-term lending facilities on Monday for the first time since August.
This is a policy tool that allows state-owned banks to inject liquidity into the financial system.
Earlier this week, Chinese stocks hit a five-year low while domestic stock benchmarks fell to their lowest in nearly five years.
Bloomberg reported on Monday that the CSI300 index fell 1.3% to close at its lowest level since February 2019.
The index has fallen session by session this year, dropping more than 4%, making it one of the world’s worst-performing major stock indexes.