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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.
China’s inflation decelerated again in December, with the CPI rising only 0.1% yoy, matching expectations and marking the slowest pace since April. This brings full-year inflation for 2024 to 0.2%, far below the official target of around 3%, extending a 13-year streak of missing the annual inflation goal.
BEIJING (Reuters) -China's exports gained momentum in December, with imports also showing recovery, though strength at the year-end was in part fuelled by factories rushing inventory overseas as they braced for heightened trade risks under a Trump presidency. U.S. President-elect Donald Trump, set to return to the White House next week, has proposed hefty tariffs on Chinese goods, sparking fears of a renewed trade war between the two superpowers. Adding to the challenges, unresolved disputes with the European Union over tariffs of up to 45.3% on Chinese electric vehicles threaten to hinder China's ambitions to expand its auto exports and help address deflationary overcapacity concerns.
Switzerland's Producer Price Index (PPI) showed signs of improvement in December 2024, as revealed by the latest data update on January 20, 2025. The PPI, which measures the average change over time in the selling prices received by domestic producers for their output, improved to -0.9% in December, up from -1.5% in November.This year-over-year comparison indicates a gradual easing of producer price deflation. The improvement suggests potential stabilization in the Swiss economy's production sectors, although the index remains in negative territory. A year ago, in December, the PPI was still relatively stronger, showcasing the ongoing challenge for Swiss producers to navigate a volatile economic landscape exacerbated by external global pressures.Market analysts are closely monitoring these indicators as they are essential for assessing inflationary pressures within the Swiss economy. The shift in PPI could forecast future adjustments in consumer prices and, consequently, influence monetary policy decisions by the Swiss National Bank in the coming months.As producers grapple with external and domestic economic factors, the eased decline in December's PPI presents a cautiously optimistic outlook for the beginning of 2025. However, it also underscores the need for continued resilience in addressing potential economic headwinds.The material has been provided by InstaForex Company - www.instaforex.com