DEFLATION STRIKES CHINA’S INDUSTRIES. China’s factories slashed prices for their goods in May by an average of 3.7 percent compared to prices a year earlier, a steeper drop than analysts had expected following April’s 3.1-percent cut.
The discounts marked the fastest deflation in the country’s industrial prices in more than four years and were sparked by feeble demand among the factories’ U.S. and European customers.
At the same time, China’s rate of inflation slowed to 2.4 percent in May from 3.3 percent in April, as prices for food rose at a slower pace.
TRENDPOST: Industrial and retail deflation accurately reflect how fast and how low economies are falling.
While inflation is also down, as forecast in last week’s Trends Journal, “Dragflation” – costs of goods services and wages decline as costs to purchase them goes up. This is a result of central banks artificially propping up economies and equity markets with cheap money.
Thus, the more cheap money they print, the lower the currencies will fall, and the more it will cost to purchase products and services.