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Deflation Fears Surface in China

Lennon Yu may be Beijing’s worst nightmare: the 24-year-old is willing to wait for car prices to fall before buying. This mindset, if it becomes widespread, could threaten to trap China’s cooling economy in a deflationary rut.

With the world’s second largest economy growing at its slowest in nearly quarter of a century, risks of deflation in China are growing just as a slump in global oil prices raises similar concerns in Europe and other parts of the world.

Consumer inflation eased in 2014 to a near 5-year low and policymakers are worried it could fall further because factory gate prices have been dropping for almost three years.

CNBC [1]

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