Categories: Market

Economic situation: China’s economy fell into deflation again in October

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Deflation also often puts pressure on company profits. (archive image)

After July, this was the second month in which consumer prices decreased this year. After showing a slight increase of 0.1 percent in August, it stagnated in September. Producer prices also weakened again in October, falling by 2.6 percent compared to the same month last year.

Deflation is the opposite of inflation and refers to the decrease in the general level of prices. A general price drop occurs when consumers avoid purchases in anticipation of further declines in prices, negatively affecting companies’ sales, profits and investments. Most economists consider deflation to be more dangerous to the development of the economy than a slight rise in prices.

At first glance, consumers benefit because they have to pay less for goods and services. However, deflation often also puts pressure on companies’ profits and therefore risks pay cuts or layoffs, for example.

(SDA)

Source :Blick

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