Market prices fall for first time in 2.5 years
China's consumer prices posted their first annual decline in more than two years in July, while factory gate prices extended their falls, data showed on Wednesday, as lacklustre demand weighed on the economy. The consumer price index (CPI) for the month dropped 0.3 percent year-on-year, the National Bureau of Statistics (NBS) said, a slightly slower fall than the median estimate for a 0.4 percent decrease in a Reuters poll. It was the first year-on-year decline since February 2021. CPI was unchanged in June. The producer price index (PPI) fell for a 10th consecutive month, down 4.4 percent from a year earlier after a 5.4 percent drop the previous month. The forecast was for a 4.1 percent fall. China's economic recovery has slowed after a brisk start to the year, as demand at home and abroad weakened. The drop in consumer prices is more cause for concern with deflationary pressures mounting amid faltering economic growth due to a persistent property downturn and falls in trade. However, authorities have downplayed concerns about deflation. Liu Guoqiang, deputy governor of the central bank, last month said there would be no deflationary risks in China in the second half of the year, but noted the economy needs time to return to normal after the pandemic. The government has set a consumer inflation target of around 3 percent this year, up from the 2 percent recorded in 2022. Despite recent policy stimulus, consumers and manufacturers remain cautious amid the still-weak housing market and high youth unemployment. Investors have been anxiously waiting for policymakers to inject stimulus measures after the powerful Politburo meeting last month, with the stock market mostly underwhelmed by the lack of concrete actions. (Reuters)