So then, Chinese inflation is falling precipitously:
There’ll be more big falls in the next few months too with some big numbers from twelve months ago dropping out of the series. It’s not hard to see where such a swift change is coming from:
Look at that food bust go! As Zarathustra predicted last month on the following chart:
That is good news, helping boost consumer’s disposable incomes. But the slippage in prices is so fast that it rather looks like the economy has hit a brick wall. Check out the PPI, which is a gauge for the input prices for production:
That’s a collapse. It’s broad based as well, though especially apparent in heavy industry:
Again, it’s across industries but is perhaps strongest in construction related activity:
But there are strong falls too in consumer facing industries:
This is a concern. It looks more like a big hit to aggregate demand than a controlled dampening of prices.
In timing its real estate busting campaign with an external slowdown brought on by Europe, the PBOC looks to have overdone it.
