Key Points
- As shoppers await price cuts, retailers like Home Depot say their prices have stabilized and some national consumer brands have paused price increases or announced more modest ones.
- Yet some industry watchers predict deflation for food at home later this year.
- Falling prices could bring new challenges for retailers, such as pressure to drive more volume or look for ways to cover fixed costs, such as higher employee wages.
China is doomed for a number of other economic factors, deflation is just the symptom.
China’s housing crisis is the primary driver. The Chinese saw land as the primary means of savings and investment for the last twenty years. Much of the economy and state funding was driven by a demand for investment housing. Now that that has stalled many people’s savings have been wiped out.
Couple that with trade wars brought in by an aggressive foreign policy and it makes for a very challenged economic environment. China’s very centralized top down decision making process is great for directing growth but it struggles to address a number of issues at the same time to the point of paralysis.
China is facing an existential crises that is only starting to unfold.