China faces a bout of deflation, economists warned Tuesday as data revealed that inflation dropped to its lowest in 2½ years in January and that the price of goods leaving factories fell 3.3% in January. Consumer price inflation fell for the ninth consecutive month to 1% in January from 1.2% the previous month as prices for clothing, transport and housing tumbled. Several economists predict inflation will be minus-1% in February and factory-gate prices will decline 6.3%. But analysts say China will avoid a prolonged period of deflation because of Beijing’s aggressive monetary and fiscal stimulus policies.

This entry was posted by Gwen Robinson on Wednesday, February 11th, 2009 at 5:18 and is filed under Capital markets. Tagged with china. Edit this entry.