Dragon's Deflation Story
The Chinese economy is in trouble. The once-mighty dragon is now struggling to breathe, and its tail is starting to wag . China's economy has fallen into deflation for the first time since February 2021, as consumer and producer prices both declined in July. The consumer price index (CPI) dropped 0.3% year-on-year, while the producer price index (PPI) fell 4.4%. This is a significant development, as deflation can be a sign of economic weakness. The Consumer Price Index (CPI) is a measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services. The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. With these two Index, Inflation of an economy is calculated. There are a number of factors that have contributed to China's defl...
