Stagflation in CCP’s Economy – Scissors Gap Between PPI and CPI Hits Record High in September

Translated by: MOS Education Team – Winsun

The National Bureau of Statistics of the Communist China announced on October 14 that the production price index (PPI) increased by 10.7% annually in September, a new high in 26 years since 1996. The increase was 1.2 percentage points higher than the previous month, and the increase was a new high since 2006. In September, the Consumer Price Index (CPI) rose by 0.7% year-on-year, slightly lower than expected, indicating that the demand side is relatively weak. The scissors gap between the two is about 10 percentage points, which has set a record high again after August.

In China, PPI-CPI scissors gap hits record high in September, 2021, a sign of stagflation.

Since mid-to-late September, the most severe wave of power and production restrictions in recent years has swept more than 20 provinces in the CCP. The reasons include the “man-made disaster” caused by the CCP’s infighting and campaign-style emission reduction, as well as objective factors such as insufficient foreign exchange, high coal prices, and difficulty in changing electricity prices.

Zero hedge forecasts, if the historical correlation between coal prices and PPI is established, it may soon see the PPI of the CCP triple, from 10.7% in September to 30% or more. In this way, profit margins will collapse, and the already thin cash flow will cause more defaults and supply chain bottlenecks, and even push costs and PPI higher in the competition for goods.

In China, unemployed workers seeking for temporary work.

The CCP’s official media “China Securities Journal” reported on Thursday that at least 13 A-share-listed companies announced price increases this year in response to rising costs and tight supply, indicating that manufacturers are beginning to try to pass costs on to consumers.

Next, the CCP’s economic policy will face a dilemma. If it relaxes, it will cause inflation to soar and trigger a deep stagflation recession; if it does not relax, the already imploded real estate market will collapse. In the face of the unprecedent economic turmoil, it’d be prudent to be well-prepared in order to protect your and your family’s lives and wealth.

References:
*. China producer prices surge fastest pace in 26 years
*. RFI reports: increase in electricity and inflation
*. China Sept inflation
*. RFI reports: China September inflation increased by 10.7%
*. 163.com reports: PPI-CPI chart demonstrates structural risks

Proofread by: RD16
Posted by: RD16

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