China inflation. Josh Gilbert, Market Analyst at eToro
Consumer prices fell at their fastest rate since September 2009, thus chaining four consecutive monthly declines, and deflation, with an interannual rate of -0.8%, shows signs of having taken hold.
Earlier this week there was some optimism that policymakers would take action in the face of the Chinese stock market crash, which lifted the CSI300 index, but today's news may dash those hopes.
However, this bad news could actually be good news. Today's result is further proof that the economy needs support. For China to emerge from deflationary territory, a strong boost in demand is necessary, which must come hand in hand with a more aggressive policy.
There is a risk that we will not see it, which would further dent confidence, curb spending and ultimately cause Chinese equities to fall.
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