Housing Prices in China declined for the first time this year. In response to the tumbling global oil prices, China’s government controlled fuel prices were reduced. Both of these two declines were welcome in a country that is facing inflation issues.
For the last couple of years food, housing and energy were on a rapid rise. Causing many economists to fear that China was approaching a “bubble” based economy. With these recent price declines, it helps ease the possibility of a run a way inflationary problem.
A statement was released over this past weekend by the National Development and Reform Commission, which is the nationals top economic planning agency. “will help lower social costs, alleviate overall price-level pressures and stimulate relatively fast and stable economic growth.”
While these numbers look good on the outside, one must consider that Food prices were not listed as declining. And since Food prices account for over 30% of China’s CPI number, the decreases are not going to have a huge affect on the over all inflation number.
It will be interesting to see if China follows the US into a recession as the entire world’s economy continues to slow.