Inflation data from China over the weekend revealed consumer prices falling at their fastest in three years (the y/y drop was the fastest since November 2020):
- Weekend news: China CPI -0.5% y/y vs -0.1% expected
- core inflation (excluding food and fuel) was 0.6% y/y in November, the same as October
Deflation at the wholesale price level continued also (PPI).
The deflationary pulse in China is a reflection of weak consumer demand, alongside factors such as falling global energy prices, the dissipation of the post-opening travel boom, a glut in supply, mounting local government debt, and the implosion of the property sector. All of this is leading to Chinese consumers pulling back.
Last week:
Hopes persist for more stimulus from China. The next event eyes by traders that might give us a chance of stimmy is the Chinese Communist Party Politburo holding the annual "Central Economic Work Conference" later in December.
This graph is from the ForexLive economic data calendar, access it here.
Chinese deflation is acting as headwind to the China trade, it's a factor in the slide in the Australian dollar this year, for example./
