First mainland deflation for 6 years
10-03-2009
China's consumer price index has fallen into negative territory for the first time in more than six years. The National Statistics Bureau reported a 1.9 percent decline in food prices in February, helping to send the index to minus 1.6 percent. State media said it was was the first negative figure since December 2002. Inflation peaked at a 12-year high of 8.7 percent in February 2008, amid shortages of grain and pork. But it has since eased as the economy slows, raising worries that deflation might sap China's ability to bounce back. The 1.6 percent decline in consumer prices compares with a 1 percent increase in January. The statistics bureau said that the producer price index, another key price indicator, fell 4.5 percent in February. That compared with a 3.3 percent decline in January. After years of trying to cool inflation and tame the overheated economy, the government has shifted to trying to revive growth. China's central bank recently warned that the economic downturn could worsen and warned the risk of deflation is "quite big" amid collapsing consumer demand.
