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So-called China deflation is good news for profits

Western media interpret every economic report from China with the bias that China’s economy is collapsing

by David P. Goldman February 8, 2024February 10, 2024

Commentators who see China's economy collapsing have their own way of looking at prices. Photo: China Dailly

To gauge price behavior, rather than the overall index number, economists look at so-called “core” consumer price inflation that excludes volatile food and energy prices – except when it comes to China.

“China sinks deeper into deflation as prices fall at fastest rate in 15 years” was CNN’s headline this morning. But the 0.8% January drop in China’s consumer price index reflected a 17% drop in pork prices. Core CPI rose by 0.4% in January. That’s 4.7% core inflation at a compound annual rate – hardly consistent with deflation.