Economic data out of China showed consumer prices are falling from a year ago. It’s a bad sign as the world’s second-biggest economy tries to revive itself after the Covid-19 slump.
The new month of negative inflation—the consumer price index dropped 0.2% from a year earlier in October—isn’t quite deflation, though some might call it that as a shorthand. Economists usually define deflation as a prolonged period of consumer prices and asset values, which is widely damaging. The fear is that China could fall into a repeat of Japan’s experience of deflation for decades starting in the 1990s. But given China’s size—it has 1.4 billion people—and the amount of catch-up it still has to do to match wealth levels of advanced economies, that seems unlikely.