In November, China's consumer prices fell the fastest in three years.
👉 Background: China is the second largest economy in the world based on GDP. It's also the second largest country in the world based on the number of citizens.
👉 What happened: In November, China's consumer prices fell the fastest in three years. We're talking a deflation of 0.5% from a year earlier. Interestingly, its meat imports were down 32% from a year ago. And given pork is the most popular meat in China, that's a whole lot less porky pig going around.
👉 What else: While lower prices sound like a good thing for consumers, it's not great for the economy. In fact, China's finance ministry have called this a disappointing way to end the year.
💡While high inflation is bad, deflation in a country's economy is even worse, especially if you're a country with a lot of debt.
💡Most countries target an inflation rate about 2-3% each year—that's the target amount that economists believe is important for stability in the economy.
💡But if a country is making less money from every item it produces and sells, it takes a lot more sales to grow the economy. So, China is now looking at pumping more stimulus into the economy to fire this up in 2024.
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