According to China Beige Book International (CBBI), deflationary pressures in China worsened in the fourth quarter due to a slowdown in the economy, and price increases are likely to be contained even after the economy recovers later this year.
In a report released today Tuesday, the corporation said companies recorded the weakest payroll and operating cost growth in the last three months of 2022 since mid-2020, adding that selling price growth also slowed to its worst level since late 2020. .
Increased deflationary pressure
The report is based on surveys conducted by CBBI, an independent provider of economic data, among 4,354 companies over the period indicated.
“Slow inflation is already taking place, and the increase in selling prices has slowed to a minimum,” she said. “The Covid hit on retail could turn the situation into a recession in the first quarter,” the report said.
Official data showed that consumer price inflation slowed to 1.6% in November from 2.1% in the previous month as Covid-19 disruptions reduced demand. Economists polled by Bloomberg expect annual inflation to remain relatively low at 2.3% this year, even as economic growth picks up.
And CBBI assumed that inflation would pick up again after the first quarter, but any rise would only compensate for the loss in prices before they fall again.
She said that any sustained and significant price increases would require prolonged policy easing, while China still faces long-term deflationary pressures due to demographic concerns.
