Analysis | Falling prices in China might just be bad for everyone – By Helen-Ann Smith (Sky News) / Aug 9, 2023
Deflation would make Chinese goods increasingly cheap which would undercut millions of foreign companies, but there would also likely be a drop off in Chinese demand for foreign imports such as food energy and raw materials.
While so many countries have spent the last year grappling with stubborn inflation, China is facing the opposite problem.
Indeed, in July prices actually fell by 0.3% compared to a year before.
While the term ‘deflation’ shouldn’t be officially coined until prices have fallen for three months in a row, there are now real fears that is where things are headed, and it is nonetheless a big moment for the world’s second largest economy.
You might think that falling prices might not be such a bad thing, indeed in the immediacy it can sometimes feel like a brief relief for households.
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