Economics
Oil Collapse to Worsen China’s Deflation, Open Path for PBOC
- Factory-gate prices could drop 5% this quarter: analyst
- PBOC was wary of large-scale stimulus amid debt, inflation
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The collapse in oil prices is set to worsen China’s factory deflation in the coming months, building pressure on the central bank to loosen monetary policy more decisively.
The most recent energy slump is another hit to companies already grappling with higher costs, broken supply chains, canceled orders and unwilling consumers. China’s factory-gate prices, which are a key inflation metric for the world economy, fell 1.5% in March, and could drop as much as 5% this quarter according to Shanghai brokerage Huabao Trust Co.