Economy: China's inflation rate has surprisingly halved
Weak demand from private households has pushed inflation down, according to economists. The increase in producer prices has also declined.
A surprising half-reduction in China's inflation rate has occurred, with the cost of goods and services increasing by only 0.5 percent in July compared to the same month last year, according to official figures released on Sunday in Beijing. This marks the lowest inflation rate in half a year. Economists surveyed by Reuters had expected a 0.8 percent increase, down from 1.0 percent in June.
Consumer relief was chiefly due to a 1.5 percent drop in daily grocery expenditures. Weak private household demand generates deflationary pressure, according to economists, stemming from the ongoing softening of the housing market, which has reduced the value of homeowners' residences, and declining job security, partly due to automation and increased use of artificial intelligence.
Consequently, many consumers are holding back on shopping. The weakening demand makes it harder for businesses to pass on higher prices. Producer price pressure also proved weaker than anticipated, with industrial prices rising 3.5 percent year-over-year, as the statistics office reported.
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