China's economy: Deflation in November - impact on the national economy and consumer prices

China's economy: Deflation in November - impact on the national economy and consumer prices

According to a report by www.finanzen.net, the Chinese economy has slipped further into deflation. Prices for goods and services fell 0.5 percent compared to the same month last year, marking the second month in a row of deflationary consumer prices. The fall in prices has been greater than most economists predicted, and producer prices have even fallen by 3 percent.

Deflation describes the decline in the general price level, which can have a negative impact on consumption, sales, profits and investments of companies. While consumers may at first glance benefit from falling prices, deflation can also depress companies' profits and bring with it the risk of wage cuts or layoffs. The ongoing deflation is seen as a sign of economic weakness, especially due to the real estate crisis, which has depressed consumer confidence for many Chinese.

Given these developments, it is likely that the Chinese economy will continue to experience difficult times. The sharper-than-expected drop in prices points to a deeper problem that may affect the country's prosperity and the international economy. The figures show that efforts to stabilize the economy are not yet having the desired effect and further measures need to be taken to stimulate the economy.