The Best of Chinese Commentators

Should deepening deflation cause alarm?

  • Published 14 May 2009

This week, the National Bureau of Statistics reported that consumer prices had fallen for the third consecutive month, while producer prices slid for the fourth straight month. Should these figures give cause for concern?

The Consumer Price Index, a measure of the average price of consumer goods and services purchased by households, fell 1.5% in April year-on-year, deepening a 1.2% decline seen in March. The Producer Price Index, which denotes the average changes in prices received by domestic producers for their output, fell 6.6% in April, down from a 6% slide in March. The People's Bank of China, the central bank, sought to damp down fears of deflation, declaring that the drop in price levels marks a mere statistical correction following a surge in food and some commodity prices early last year.

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