The decline marked the first drop since October 2009, according to the Wind Information database. Food prices fell 2% as pork prices declined 12.5% in November from a year ago. The drop in prices for the Chinese meat staple follows a surge in the last year due to a shortage of pork as a result of an African swine fever outbreak.
The sharp increase in pork prices in the last three months of 2019 makes November’s drop less meaningful, Ting Lu, chief China economist at Nomura, said in an email. “The negative (year-on-year) inflation does not mean deflation for China,” he said. Economists did not expect major changes in monetary policy from the People’s Bank of China as a result of the drop in CPI.
The so-called core CPI — which excludes food and energy prices — rose 0.5% in November from a year ago. Medical care prices rose 1.5%, while that of education, culture-related activities and entertainment rose 1%, according to the statistics bureau.
The producer price index, which measures prices of goods and services from the perspective of sellers, fell 1.5% in November from a year ago. That was 0.6 percentage points less of a decline versus October’s figure, the statistics bureau said.
China’s economy contracted at the start of the year due to the shock of the coronavirus pandemic. While growth has since recovered, consumers are still under pressure. Average selling prices for a basket of household consumer goods fell 2.1% in the first three quarters of the year, according to the “China Shopper Report” released last week by research and consulting firms Bain and Kantar Worldpanel. The price drop came as volume grew 2% from a year ago.