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- CNBC Deflation is a decrease in the general price level of goods and services. It is the opposite of inflation, which is an increase in the general price level. Deflation occurs when the inflation rate falls below 0 percent. The most extreme form of deflation is a prolonged period of falling prices, called a deflationary spiral. This occurs when the deflationary forces become so strong that they cause a continuing fall in prices, leading to a decrease in demand, which leads to even lower prices and so on. This can be very damaging to an economy, as it reduces economic activity, leading to job losses and even a recession. Deflation can be caused by a decrease in the money supply, a decrease in government spending, or a decrease in aggregate demand. The most famous example of deflation was the Great Depression of the 1930s.
Today it is time to look East again as we have received the official data on economic growth in the first half of the year. At the moment in addition to our long-running theme on the bursting of the property market bubble we have the first period under the new Trump Tariffs. As ever the…
GDP growth remained solid at 5.2% y/y in Q2, while monthly data indicates signs of softening. Investment growth slowed sharply in June partly due to a deeper decline in housing investment. Deflationary pressure escalated, partly reflecting overcapacity in some sectors.
Iron ore futures remained just below CNY 800 per tonne on Wednesday as investors considered the potential extension of the US-China tariff truce. President Donald Trump is tasked with approving the proposed plan; failure to reach an agreement by the August 12 deadline could result in tariffs reverting to their previous April levels. Compounding global trade concerns, the newly established US-EU agreement retained the existing 50% tariffs on steel and aluminum. This development has heightened market apprehensions regarding rising protectionism. Meanwhile, investors are keeping a close eye on the Politburo meeting scheduled for this week, which may unveil possible stimulus measures to bolster economic growth. As part of these initiatives, Beijing has stepped up efforts to address deflation and curb industrial overcapacity. President Xi Jinping recently criticized local governments for their excessive investments in industries such as artificial intelligence, computing power, and new energy vehicles.The material has been provided by InstaForex Company - www.instaforex.com
In July 2025, China's producer prices experienced a year-on-year decrease of 3.6%, maintaining the same rate as June and surpassing market expectations of a 3.3% decline. This represents the 34th consecutive month of producer deflation, consistent with the steepest drop recorded since July 2023.The material has been provided by InstaForex Company - www.instaforex.com
In a notable shift from the previous month, China's Consumer Price Index (CPI) experienced a remarkable recovery, registering a positive change in July 2025. Official data updated on August 9th reveals that the CPI surged to 0.4% compared to the -0.1% recorded in June, marking a significant turnaround for the world's second-largest economy.The July rise in CPI underscores a month-over-month rebound, which follows a period of negative inflation. June's decline had economists concerned about the potential for prolonged deflationary pressures, but the latest figures allay those fears, signalling a return to modest inflationary growth.Economic analysts are optimistic about this upward trend, attributing the progress to stabilized market conditions and policy adjustments by the Chinese government aimed at stimulating consumer demand. As China continues to navigate the complexities of economic recovery, the latest CPI data provides an encouraging indicator of increasing consumer confidence and spending. The coming months will be crucial in determining if this momentum can be sustained.The material has been provided by InstaForex Company - www.instaforex.com
Egypt's annual urban inflation rate decreased for the second month in a row, reaching 13.9% in July 2025, a decline from 14.9% in June. This follows a peak in May, primarily due to rising fuel costs. July's inflation rate marks the lowest since April, with a significant slowdown in food prices being a major factor. Food price inflation was the lowest since June 2021, dropping to 3.4% from 6.9% in June. Additionally, price increases eased across several sectors: transport (from 42.2% to 41.5%), restaurants and hotels (from 17.3% to 15.2%), clothing (from 16.0% to 14.9%), furnishings (from 13.8% to 12.9%), communications (from 12.2% to 12.1%), and miscellaneous goods and services (from 13.7% to 13.6%). On a month-to-month basis, the Consumer Price Index (CPI) decreased by 0.5% in July, following a 0.1% downturn in June. This marks the second month of deflation in a row, with the most significant decline since May 2024.The material has been provided by InstaForex Company - www.instaforex.com
In July 2025, Norway experienced a 0.3% decrease in producer prices compared to the previous year. This marks the third consecutive month of producer deflation, although it indicates a moderation from the 1% decline observed in June. Specifically, the rate of price reduction for energy goods became less severe (-4.2% compared to -5.4% in June), as well as for the extraction of oil and natural gas (-5.7% versus -6.6%). Conversely, there was an acceleration in price growth for sectors such as electricity, gas, and steam (23.6% up from 12.9%), along with manufacturing (2% compared to 1.8%). Excluding energy goods, producer prices slightly rose, reaching 2.9% in July, up from 2.8% in June. On a month-to-month basis, producer prices increased by 0.8%, recovering from a 0.3% decline in the prior month.The material has been provided by InstaForex Company - www.instaforex.com