Chinese consumer prices fell in January at their quickest rate in more than 14 years, data showed Thursday, as the country’s leaders struggle to revive buying sentiment in the world’s second-biggest economy.
The reading will likely add to calls for officials to do more to breathe life into the economy, with central bank interest rate cuts and measures to boost lending having little impact so far.
The 0.8 percent drop in the consumer price index, revealed by the National Bureau of Statistics (NBS), marked the fourth straight month of deflation and was much bigger than the 0.5 percent fall forecast in a survey by Bloomberg News.
The reading was the worst since the second half of 2009, during the global financial crisis.
And a 2.5 percent plunge in the producer price index (PPI) – which measures the cost of goods leaving factories – signalled continued weakness.
10% deflation would lead to job losses. Companies make less money and start firing people quickly. This causes more deflation since everyone is scared of losing their jobs.
10% inflation is a big pain in the ass. 10% deflation is a potential layoff.
Companies make less money and are less inclined to hire as they know they can hire someone else soon for less.
Yes, increased unemployment when we are one of our lowest unemployment rates in a long time - low unemployment also drives inflation.
I see it like the housing market - only way for the next generation to have a chance is for everyone else to lose on their investments or ownerships. Falling house prices will also cause mortgagee sales but it still needs to happen.
Those two things aren’t comparable.
The way to drop House prices is to increase supply by destroying housing and replacing them with something higher density and by reducing demand due to foreign ownership.
Just look at Japan. No housing crisis? Why?
Gee, I wonder…
Increase supply or reduce demand.
Falling house prices would mean its no longer a profitable investment - in the short term Q supplied would greatly increase as stock comes from investor market to consumers. Long term it may create issues where houses aren’t built because investors don’t want them, but at the same time more families would build for themselves.