China consumer prices plunge at fastest rate in 15 years | Hacker News Reader

China consumer prices plunge at fastest rate in 15 years

theguardian.com

8 pointsPaulHoule9 comments

It is a bit hard to follow why a single digit percent drop in food prices would be a bigger economic problem.

I can follow that falling house prices can create a spiral where people defer purchases - but no one is going to defer buying a fried rice because it will be 5% cheaper next year.

But this - falling prices on daily necessities - sounds like more of a positive.

I guess it would depend on the cause for the price drops since there could be many reasons for them. If it were because of an increase of efficiency then it would be a good thing, more things being made for less increasing supply causing them to be cheaper at a given demand is a good form of growth. The article mentions the drops are coming from a decrease in demand though, not an increase in supply. This kind of thing could conceivably lead to a spiral of lower demand -> cheaper prices -> less production -> less money flow -> lower demand -> ... under certain conditions.

I'm no economics major though, so more educated interpretations of why it could be bad are appreciated.

Pretty sure the pork slump is simply due to oversupply. Pig farming is mostly feast or famine, and last year's shortage is this year's surplus (price signals to fully grown pig time is incredibly laggy).

This is mostly because of seasonality. Chinese new year in 2023 was in January. In 2024 it is in February. Price always rises the biggest in Chinese new year because people tend to consume not produce during the period. Thus Jan YoY will be unusually lower, while Feb YoY will be higher in 2024.

So fastest in 15 years means...this plunge isn't special from other plunges after CNY starts because there is something special about this cycle?

"fastest pace in 15 years in January",

This is year on year data, so its being compared to Januaries in previous years not every month in previous years.

But there are have been multiple February CNYs in the last 15 years, I'm pretty sure of it.

you’re correct. 9 of the last 15 years: 2022, 21, 19, 18, 16, 15, 13, 11, 10.

We should be so lucky.

How're your prices this month? Lower than last month's? Thought so.

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