In my 2012 forecast for China’s economy, I pointed out that while the consensus seems to suggest that the future for China will be inflationary because of ageing population and shrinking labour force (see also BarCap’s view on this issue, in which they think China will have a structurally high inflation in the years to come), I raised my serious doubts on this issue, citing that Japan has no inflation at all, and that China today is having the same sort of problems Japan had when Japan’s real estate bubble burst.
I have just discovered, Michael McDonough of Bloomberg Brief chart below, which provides a very good overview on population ageing and inflation. In short, countries with older demographics have lower inflation:
