China’s consumer price index fell in November for the first time in about a decade as food prices dropped.
The consumer price index, a measure of inflation that tracks prices for a basket of consumer goods and services, fell 0.5% in November from a year ago, China’s National Bureau of Statistics said Wednesday.
The decline marked the first drop since October 2009, according to the Wind Information database.
Food prices fell 2% as pork prices declined 12.5% in November from a year ago.
The drop in prices for the Chinese meat staple follows a surge in the last year due to a shortage of pork as a result of an African swine fever outbreak.
The sharp increase in pork prices in the last three months of 2019 makes November’s drop less meaningful, Ting Lu, chief China economist at Nomura, said in an email.
“The negative (year-on-year) inflation does not mean deflation for China,” he said.
Economists did not expect major changes in monetary policy from the People’s Bank of China as a result of the drop in CPI.
The so-called core CPI — which excludes food and energy prices — rose 0.5% in November from a year ago. Medical care prices rose 1.5%, while that of education, culture-related activities and entertainment rose 1%, according to the statistics bureau.
The producer price index, which measures prices of goods and services from the perspective of sellers, fell 1.5% in November from a year ago.
That was 0.6 percentage points less of a decline versus October’s figure, the statistics bureau said.
“The underlying economy is strong given the narrowing PPI deflation,” Larry Hu, chief China economist at Macquarie, said in an email.
As a result, he expects China’s central bank will look past the overall drop in consumer prices and focus on reducing some stimulus.
China’s economy contracted at the start of the year due to the shock of the coronavirus pandemic. While growth has since recovered, consumers are still under pressure.
Average selling prices for a basket of household consumer goods fell 2.1% in the first three quarters of the year, according to the “China Shopper Report” released last week by research and consulting firms Bain and Kantar Worldpanel. The price drop came as volume grew 2% from a year ago.
“Because of the uncertainty of Covid and also people’s uncertainty on their disposable income, there’s a tendency of going for more value for money,” Derek Deng, partner at Bain and co-author of the report, said in a phone interview Wednesday.
“Also, to make up for the loss during the first half of the year, a lot of the brands and categories increase their levels of promotion.”