China's consumer prices down 0.2% as Singles Day spending muted

Nikkei Asia ^

[FarCenter]

SHANGHAI -- China's consumer prices declined slightly in October, according to data released Thursday, while a new survey suggests economic headwinds are restraining shoppers during the country's Singles Day retail campaign.

Weighed down by falling food prices, the consumer price index fell 0.2% compared with the same month a year earlier, the statistics office said. With deflationary pressure looming over the country's growth prospects, the index had also contracted in July. It was flat in September.

Factory gate inflation in October came in at -2.6%, versus -2.5% in the previous month, due to softer commodity prices.

Declining aggregate demand appears to be affecting the three-week Singles Day shopping campaign, which wraps up on Saturday. A survey of 3,000 Chinese shoppers by Bain & Co. found that 77% said they would spend less this year, continuing a pullback seen in 2022.

"The Chinese macroeconomic headwinds that are making consumers more value-conscious have been well publicized," the research firm said in a report on Wednesday. This includes a growth slowdown, weak consumer confidence and concerns over the property market, all reflected in the survey, the consultancy continued.

Launched by e-commerce giant Alibaba in 2009, the annual Singles Day event has since evolved into a national shopping extravaganza across multiple marketplaces, including retailer sales pitches on livestreaming platforms. The event is regarded as a gauge of household consumption.

This year marked a return to business as usual after China ended its strict pandemic restrictions. But consumers appear to be staying cautious, as the recovery has not lived up to expectations.

U.S. consulting firm AlixPartners said Singles Day shoppers were likely to increase purchases of necessities like groceries, clothing and personal care products. On the other hand, it added, consumers were turning away from luxury goods.

[lightman]

the annual Singles Day event has since evolved into a national shopping extravaganza across multiple marketplaces, including retailer sales pitches on livestreaming platforms. The event is regarded as a gauge of household consumption.

Yes, I read the article; but nevertheless:

WTF?

Annual economic "pulse check?"

[lightman]

Chinese “Black Friday” ???

[who_would_fardels_bear]

"Weighed down by falling food prices"

They make it sound like a bad thing.

What are we to make of it when economists tell us that both inflation and deflation are bad for the economy?

Are we supposed to pray to Sts. Adam Smith and Keynes for a completely stable money value?

[FarCenter]

Economic orthodoxy seems to be that 2% inflation is the ideal.

Deflation is thought to be bad because it makes creditors have to pay back loans with more expensive currency.

A little inflation sort of erodes away bad debt without the need for painful bankruptcies.

[Robert DeLong]

Deflation is when consumer and asset prices decrease over time, and purchasing power increases. Essentially, you can buy more goods or services tomorrow with the same amount of money you have today. This is the mirror image of inflation, which is the gradual increase in prices across the economy.

While deflation may seem like a good thing, it can signal an impending recession and hard economic times. When people feel prices are headed down, they delay purchases in the hopes that they can buy things for less at a later date. But lower spending leads to less income for producers, which can lead to unemployment and higher interest rates.

This negative feedback loop generates higher unemployment, even lower prices and even less spending. In short, deflation leads to more deflation. Throughout most of U.S. history, periods of deflation usually go hand in hand with severe economic downturns.

[Robert DeLong]

Annual economic "pulse check?"

Yeah, that is a fair analogy.