China’s Deflation Looks Pretty Good Compared to U.S. Inflation

Sep 5, 2023 | Macro Insights, No Bull Economics

China Deflation Post Banner

While the U.S. has been suffering from severe post-covid inflation, China’s prices have been spiraling lower. What’s up with that?


  • Post-covid supply disruptions & shortages are the well-known culprit of U.S. inflationary pressures that has plagued the economy, hitting lower-income consumers particularly hard.
  • On the other hand, China has experienced significant post-covid deflation with its CPI index declining from 100 at February 2020 to 0 currently (vs. the U.S. CPI index which expanded from 100 to almost 120 during this same period).
  • Analysts attribute China’s deflation primarily to declining transportation & food prices (notably China’s pork prices are down -26% y/y). Further, China’s economic slowdown has led to lower demand & prices for raw materials & commodities (although this doesn’t seem to be the case in the U.S.).
  • The challenge posed by China’s deflation is that it will make it difficult for U.S. producers to match China’s export pricing, possibly translating into lost domestic market share.
  • U.S. policymakers would do well to explore: (1) why there has been such a material divergence in U.S. & China prices; and (2) how to keep U.S. manufacturers from losing share from this odd anomaly.  
CPI U.S. vs China Graph

Marketing Consumer Research Weekly Banner
NoBull Posts Thumbnail
Restaurant Research

Email Sign-up

15 Second Posts

Latest Release for Personal Consumption Expenditures (PCE)

The consumer still looks good according to the government’s recent release of personal consumption expenditures (for August 2023) as there have not been any material changes in growth for either disposable income or consumption expenditures.

Small Biz Insights on Trucking Industry

In this post, we discuss the massive post-covid changes to the trucking business with Tony Lovallo who has been running his own freight company since 2010. Tony’s insights provide a 360 look into the shipping business & consumer patterns with important economic implications.

Darden 1Q24: Sales +11.6% Y/Y, Comps +5.5% Y/Y

Darden reported that industry same-restaurant sales increased +0.9% and industry same-restaurant guest counts decreased -4.2% during its fiscal 1Q24. The chain’s comps outperformed the industry by +4.1% and its traffic outperformed by +4.3% (= flattish traffic for Darden during the quarter).

Job Market Looks Solid

In this chart, we subtract total quits from total hires. The excess of hires over quits looks very good relative to the historical level even though the positive gap recently dipped slightly. Workers are staying at their jobs longer even as they continue to have new employment opportunities.

The Economics of Politics

As the U.S. gears up for the 2024 elections, it is important to consider changes to our elections and governance that can unite the citizens of this great country.

2Q23 Retail Same Store Sales

NoBull’s Retail Same Store Sales Report benchmarks 80+ large consumer retail companies by domestic same store sales including annual (2019 – 2022) and quarterly results (2Q22 to 2Q23).

Walmart Investor Presentation: Inflation Here to Stay

While general merchandise prices are lower y/y, they remain elevated compared to 2 years ago. As Walmart does not believe general merchandise and food (dry grocery) & consumable prices are ever going to completely disinflate, management suggests the need for a country-wide wage increase rebalancing.

Interesting Conversation with Fed Chair Powell

Okay, Powell didn’t actually take our call, but we offer a transcript of a potential discussion between the Fed Chair and John Q. Public. It’s very insightful, so please read on.

The Problem with Investment Diversification

Every investment advisor and business student knows that portfolio diversification is key to wealth building. Show me an investor who can beat the S&P 500 Index by buying a few handpicked stocks and I will show you a hedge fund manager in the making. However, there is a huge problem with this strategy that no one is talking about.

Part 3: Analyzing Performance of Low-Income Oriented Retail Companies

We created an index for the financial performance of 5 low-income oriented retail companies to assess the health of this demo. While we recognize that these companies have benefited from the trade-down of higher-income consumers, things look reasonable at least through calendar 2Q23. 

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company