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Prices of Chinese manufacturers slow down for the seventh month in a row, raising fears of deflation




© Reuters. PHYN PHOTO: Workers inspect steel pipes at Hebei Huayang Steel Pipe Co Ltd in Cangzhou

– Factory inflation in China slowed down for the month in a row in January to the weakest since September 2016.

Consumer inflation, meanwhile, woke up in January from December to the 12-month low due to a slower increase in food prices, showed official data on the eve of the month, despite a lunar New Year's holiday, which, as a rule, raises the demand for food.

The Chinese producer price index (CPI) in January grew by 0.1

% compared to the previous year. a sharp deceleration compared with the previous month by 0.9%. Analysts surveyed by Reuters expects that producer inflation will slow down to 0.2%. Producer prices have already fallen over the past three months. In December, PPI decreased by 0.6%, decreasing with a 1% decline in December.

"It's too early to say that China has entered a deflationary environment, but the risks have certainly risen," said Raymond Young, Chief Economist of Greater China at ANZ, adding that the profitability of industrial enterprises is higher than the current. The profits of China's industrial companies declined for the second consecutive month in December, pushing for politicians to support the industry suffered as a result of the slowdown in prices and weak activity at the plant. for years when they rose from 0.8% in December. Price increases in the manufacturing sector also become negative

Recent factory surveys indicate a weakening of domestic orders and a reduction in business activity, with both official and private reports pointing to the growing tensions in the manufacturing sector in China, which is a key source of growth and jobs. 19659004] The domestic demand for industrial goods and services has continued in recent months, as the government's multi-year campaign aimed at curbing corporate debt and risky credit practices has weakened capital expenditures and corporate investment.

In the coming months, we expect politicians to develop further measures to alleviate financial pressures on industrial enterprises, including lowering base rates on loans, "said Julian Evans-Pritchard, China's senior economist at Capital Economics.

a year earlier, slower than growth of 1.9% in December, and below expectations by 1.9%.

The Consumer Price Index (CPI) grew by 0.5%.

The food price index in January rose by 1.9% compared to the previous year, compared with the December figure of 2.5%, showed data on the same date.

Moderation in food prices violates the historical picture of acceleration, which is usually preceded by weeks Long Moon New Year, which came in the first week of February this year.

Although the slowdown was partially due to the decline in pork prices, since the impact of African swine fever on industry has retreated, the wider impact on price pressures

The Basic Consumer Price Index, which holds back the volatile prices of food and energy, grew by 1.9% year-on-year, accelerating from 1.8% in December.


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