China faces a deflationary crisis, the demand outlook is bleak, and oil prices have fallen to a nine-month low

China's consumer price index fell much more than expected, falling below zero for the first time in 13 months, sparking pessimism about its "deflation" and a gloomy outlook for Chinese demand, dragging international oil prices to near their lowest point since September.

China's consumer price index fell into negative territory and faced a deflationary crisis

According to Bloomberg, China's National Bureau of Statistics released on Sunday that the consumer price index fell 0.7% in April from a year ago and rose 0.5% last month. Well below Bloomberg analysts' expectations. Goldman Sachs said consumer inflation slowed to its lowest level in months, even after adjusting for the impact of the Lunar New Year holiday earlier than usual. It shows that China's domestic demand is still weak, and China's economy is facing deflationary pressure.

There is a growing urgency for the government to stimulate the economy. Despite the threat of an intensifying trade war with the United States, China announced at its National People's Congress session last week a target of about 5 percent economic growth by 2025. Beijing has also drawn up plans to stimulate fiscal revenue and boost domestic consumption.

China has also set its inflation target at its lowest level in more than 20 years, and now aims to keep consumer price growth at around 2%, down from 3% previously. This shows that senior leaders are finally waking up to the deflationary pressures facing the world's second-largest economy.

Bloomberg's calculations, based on China's deficit estimates, show that nominal economic growth is expected to be around 5 percent this year, in line with Beijing's inflation-adjusted target. The outlook suggests that officials expect overall inflation to be low or even zero.

China's demand outlook is bleak, with oil prices falling to a nine-month low

Oil prices fell to their lowest point near September due to weak Chinese economic data and a bleak demand outlook. Brent crude is trading near $70 a barrel, while West Texas crude fell below $67 after seven consecutive weeks of declines.

Crude oil prices have been hit by a series of negative factors, including the escalation of the global trade war, plans to increase production by the Organization of the Petroleum Exporting Countries and its allies, and talks that could end a three-year war in Ukraine. That prompted speculators to cut their net bullish bets on global benchmark Brent crude for the biggest cut since July.

Saudi Arabia cut prices on Friday for the first time in three months for buyers in its biggest market, Asia. Earlier, after several delays due to market weakness, OPEC+ unexpectedly agreed last week to increase supply in April.

This article on China facing a deflationary crisis, a gloomy demand outlook, and oil prices falling to a nine-month low first appeared in Chain News ABMedia.