| Fund independent journalism with £5 per month |
|
|
China has dropped into deflationary territory for the second time this year, reigniting concerns over its economy. Consumer prices in the world’s second-largest economy fell in October by 0.2%, compared with the previous year, a larger decline than the 0.1% expected.
Chinese producers also cut prices at a faster rate. The producer price index (a measure of prices at the factory gate) fell by 2.6% year-on-year, following a 2.5% drop in September. That could push inflationary pressures down globally.
The drop in China’s CPI was partly due to cheaper food prices – pork, for example, cost 30% less than a year ago, with an oversupply of pigs and weak demand making this popular staple cheaper.
But there was also a notable slowdown in core inflation (stripping out food and energy), which fell to 0.6% in October from 0.8% in September.
While cheaper goods and services are welcome news for Chinese consumers, the fall in prices will worry Beijing, as it suggests economic demand remains weak almost a year after pandemic restrictions were ended. Back in August, China’s inflation rate fell below zero, before returning to positive territory in October.
Deflation is a serious situation – falling price levels lead to a rapid slowdown in economic activity as consumers cut spending and businesses invest less (on the logical grounds that it will be cheaper next year).
Robert Carnell, ING’s regional head of research for the Asia-Pacific, argues China is actually grappling with “low underlying inflation”.
He says: 'What China has right now, is a low rate of underlying inflation, which reflects the fact that domestic demand is fairly weak. What today’s data show is that it doesn’t take much of a negative shock from one of the components to push a low underlying headline inflation rate below zero on a year-on-year basis. If you want to use any term, “disinflation” would be my preference, but what we are seeing today is mainly the result of a supply excess, rather than a collapse in demand."
Carnell adds that the inflation report highlights the “hog cycle” – when pork prices are high, farmers hold back pigs from the market to expand their herds, leading to a glut, causing herd shrinkage, etc etc. He says: 'China is not experiencing “deflation” as most headlines attest. But its pork prices are undoubtedly much lower, good news for all except farmers, probably.'
Goldman Sachs predicted that China’s headline CPI should rise gradually in the coming months, although “persistent pork prices deflation is likely to slow the pace”.
Britain’s energy regulator has fined six suppliers a total of £10.8m for missing their targets for smart meter installation last year. British Gas, OVO, Bulb, E.ON, Scottish Power and SSE all missed their rollout targets, leading to a shortfall of 1,026,628 smart meters, Ofgem has announced.
The suppliers have all agreed to make payments into Ofgem’s Energy Industry Voluntary Redress Fund (EIVRF) – which is used to provide help to consumers in vulnerable situations who are most at risk from cold homes and high energy bills.
Cathryn Scott, director of Enforcement and Emerging Issues at Ofgem, said: “The installation of smart meters is a vital step in the modernisation of our energy system and the path to net zero by 2050. Smart meters give customers better information about their energy usage helping them budget and control their costs.”
Some suppliers did cite “mitigating factors” for missing their targets, some of which Ofgem considered when setting their payments into the EIVRF, but didn’t hold a detailed review into what went wrong.
The agenda
• 8.10am GMT: ECB chief economist Philip Lane speaks in Frankfurt, Germany
• 9am GMT: ECB economic bulletin released
• 11am GMT: Ireland’s consumer price inflation data released
• 1.30pm GMT: US weekly jobless report
We’ll be tracking all the main events throughout the day ... |
| If you have any questions or comments about any of our newsletters please email [email protected] |
| | | We have all been profoundly shaken by recent events in Israel and Gaza. This latest conflict marks the start of a chapter that is likely to affect millions of lives, both in the Middle East and further afield, for years to come. With reporters on the ground, and others producing live blogs, videos, podcasts and photo essays as the story unfolds, the Guardian is dedicated to bringing you independent, fact-checked journalism 24/7.
We appreciate that not everyone can afford to pay for the news right now. That’s why we choose to keep our journalism open for everyone to read. If this is you, please continue to read for free.
But if you can, can we count on your support at this perilous time? Here are three good reasons to make the choice to fund us today. | | 1 | Our quality, investigative journalism is a scrutinising force at a time when the rich and powerful are getting away with more and more. |
| | 2 | We are independent and have no billionaire owner pulling the strings, so your money directly powers our reporting. |
| | 3 | It doesn’t cost much, and takes less time than it took to read this message. |
| | Choose to power the Guardian’s journalism for years to come, whether with a small sum or a larger one. If you can, please support us on a monthly basis from just £2. It takes less than a minute to set up, and you can rest assured that you're making a big impact every single month in support of open, independent journalism. Thank you. | | Support us |
|
|
| | |
|
| Manage your emails | Unsubscribe | Trouble viewing? | | You are receiving this email because you are a subscriber to Business Today. Guardian News & Media Limited - a member of Guardian Media Group PLC. Registered Office: Kings Place, 90 York Way, London, N1 9GU. Registered in England No. 908396 |
|
|
|
|
|
