Home News Exhibition & Activity Magazine Media Partner Partner

Neither hyperinflation nor deflation will happen in China | FOOD2CHINA news
Post Time:2020-07-06Author:FOOD2CHINA-Nina NIP

Neither hyperinflation nor deflation is likely to happen in China this year, and the country's inflation will be within a reasonable range despite disruption from the coronavirus, according to an article written by scholars at the People's Bank of China (PBC) monetary policy department. 

Liu Xuezhi, a macroeconomics expert at Bank of Communications, also predicted that China's consumer price index (CPI) will grow moderately at about 3 percent this year. 

The experts' clarification came at a time when there were some voices questioning the lurking risks in China's commodity price fluctuation, suggesting China might face "hyperinflation" after China's CPI surged earlier this year, then mentioning the possibility of "deflation risks" when China's CPI growth fell back quickly in recent months. 

China's CPI growth fell back for the fourth consecutive month to register a year-on-year rise of 2.4 percent in May, compared with 3.3 percent in April, 5.4 percent in January and 5.2 percent in February, according to data from the National Bureau of Statistics (NBS). 

According to the PBC analysis, the easing of China's consumer inflation in recent months shows that hyperinflation is not likely. 

China's rapid CPI climb, which started around October 2019 and peaked in January, was most likely due to the rise in pork prices as a result of sluggish pork production, particularly after the spread of African swine fever in China in 2019, Liu told the Global Times on Wednesday. 

However, this is just a temporary trend, and pork prices have fallen since the government took measures to steady pork supplies, which in turn suppressed China's CPI level, Liu said. 

By June 23, pork prices had dropped by around 13 percent compared with mid-February, the PBC article showed. 

Likewise, deflation is also improbable this year, Liu said, as many services prices were just temporarily suppressed, such as air ticket prices, as a result of the coronavirus' effect on demand. 

"As market demand has gradually recovered, inflation should also rise moderately in the second half this year," Liu said. He predicted that China's CPI will grow at around 3 percent for the whole of 2020. 

He noted that China has ample room for policy adjustment, such as adjustment of market interest rates and reduction of the reserve requirement ratio, in case commodity prices see abnormal fluctuations. 

The PBC article also noted that China's economy is gradually recovering without overheating or overcooling, and this rules out the risk of large-scale inflation or deflation in the country. 

"In the medium and long term, China's trend of economic improvement has not changed, and this is an important guarantee for China's commodity price to keep stable," the article noted.



source: global times

Read More

Post Trade Lead

Follow Us

Subscription

Back to top