China's economy is in trouble. The country has slipped into deflation, with consumer prices contracting for the first time in more than two years. This is a major setback for the Chinese government, which had hoped to achieve a strong economic recovery after the Covid-19 pandemic.
Consumer prices fell for the first time in more than two years in July, and producer prices contracted for the 10th consecutive month. This is a sign that demand in the world's second-largest economy is weakening. The consumer price index (CPI) fell by 0.3% in July from a year earlier, the National Bureau of Statistics said Wednesday. This is the first time since February 2021 that the CPI has declined. Economists surveyed by Bloomberg had expected a 0.4% decline.
The producer price index (PPI) fell by 4.4% in July from a year earlier. This is the 10th consecutive month of contraction for the PPI. The PPI measures the prices of goods at the factory gate, and a decline in the PPI indicates that input costs for businesses are falling.
