In the first quarter, China’s economic data was primarily focused on GDP growth. While this was an important aspect, less attention was paid to deflation. Real GDP grew by 5.3% year-on-year in the first quarter, exceeding the annual target of approximately 5%. However, nominal GDP only increased by 4.2%, indicating a 1.1% year-on-year decrease in the GDP deflator.
The GDP deflator is a broader measure of price level changes compared to the consumer price index and the producer price index (PPI), providing valuable insight into the overall economic situation across different sectors. For the first quarter of 2021, China’s GDP deflator stood at -1.1%, which was the lowest since 2009 when it reached -1.5% for both the second and third quarters. This suggests that prices in China are falling at a faster rate than expected, which could have implications for consumer spending and business investments in the country.
