Chinese Deflation Another Worrying Signal for Commodities Demand
- Government seems reluctant to spend big on infrastructure
- Analysts expect targeted stimulus to put a floor under prices
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Commodities bulls betting on a revival in Chinese demand will be hoping for more visible policy support as prices retreat in the world’s biggest buyer of raw materials.
Faltering imports and a prolonged property market slump have been compounded by a plunge in consumer prices, which have joined factory-gate prices in succumbing to deflation. Although the government said the drop will be temporary, it nevertheless presents another worrying signal for commodities and makes efforts to stimulate the economy ever more urgent.