Could Deflation Come to China?

The words deflation and China appeared in the same headline over the weekend at GEI News.  What sort of stuff are they smoking over there?
Wait a minute!!!  Over there is right here – I am the editor of that electronic rag and that was my headline.  And whatever it is they have been smoking “over there” didn’t make it to my lungs so I feel cheated.
So let’s take a critical look at that “reckless” headline and see what is going on.  This look is being written in an Op Ed because, although we will look at and try to interpret data, the examination is less thorough than this analyst wants to put in the Analysis Blog.

Follow up:

The news article was reviewing a slew of data released Saturday by the official Chinese government agency, the National Bureau of Statistics (NBS). The headline number, the CPI, was up 3.0% year-over-year, hardly a deflationary number. But, when you read further in the article you find that PPI was down 1.4% year-over-year.  And that is where a deflationista’s ears should perk up.

It is not just the fact that PPI is negative that should get your attention, but also of note is the rapidity with which it got there:  Just ten months ago the PPI rate of growth was 7.5%, so PPI has not only gone negative, it has gotten there via a massive collapse.  And that is not all, other sharp declines in inflation measurements have also occurred.


Read more: http://econintersect.com/b2evolution/blog2.php/2012/06/11/could-deflation-come-to-china