Deflation pressures in China showed up starkly in the inflation data over the weekend

<p>Inflation data from China over the weekend revealed consumer prices falling at their fastest in three years (the y/y drop was the fastest since November 2020):</p><ul><li><a href="https://www.forexlive.com/news/weekend-news-china-cpi-05-yy-vs-01-expected-20231210/" target="_blank" rel="follow" data-article-link="true">Weekend news: China CPI -0.5% y/y vs -0.1% expected</a></li><li>core inflation (excluding food and fuel) was 0.6% y/y in November, the same as October </li></ul><p>Deflation at the wholesale price level continued also (PPI).</p><p>The deflationary pulse in China is a reflection of weak consumer demand, alongside factors such as falling global energy prices, the dissipation of the post-opening travel boom, a glut in supply, mounting local government debt, and the implosion of the property sector. All of this is leading to Chinese consumers pulling back. </p><p>Last week:</p><ul><li><a href="https://www.forexlive.com/centralbank/chinas-state-banks-stepped-in-to-support-yuan-tuesday-moodys-downgraded-chinas-outlook-20231205/" target="_blank" rel="follow" data-article-link="true">Moody's downgraded China's outlook</a></li></ul><p>Hopes persist for more stimulus from China. The next event eyes by traders that might give us a chance of stimmy is the Chinese Communist Party Politburo holding the annual "Central Economic Work Conference" later in December. </p><p align="left">This graph is from the ForexLive economic data calendar, <a href="https://www.forexlive.com/EconomicCalendar">access
it here</a>.</p><p align="left">Chinese deflation is acting as headwind to the China trade, it's a factor in the slide in the Australian dollar this year, for example./ </p>

This article was written by Eamonn Sheridan at www.forexlive.com.