China Chart of the Week: Deflationary Pressure Gathers Steam


China’s National Bureau of Statistics recently released data on the prices of 50 different industrial inputs.  The tracked products include: copper, chemicals, oil, coal, rice, and wood.  This data show the average price of these products over 10 days and compares them with average price of the previous 10 days.  And over the past 6 months, the number of items that have decreased in price has risen markedly.  In late June 2014, around 23 out of the 50 products’ priced declined compared to the previous 10 days, and for the most recent period January 1st – 10th, 38 of the monitored products’ prices declined.  This signals that deflationary pressures are increasing in China, and might put pressure on the PBoC to further lower interest rates. As we noted in a previous post, the ongoing deflationary trend in China’s industrial sector is having a deleterious impact on their rebalancing effort.

Input Producer Prices

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