By Steve Hochberg and Pete Kendall, Elliott Wave International
The following article was adapted with permission from the November 2014 issue of The Elliott Wave Financial Forecast, a publication from Elliott Wave International, the world’s largest market forecasting firm. Follow this link for the complete article.
According to the latest figures, deflation is now perched on China’s doorstep.
In September, China’s consumer price index was up 1.6%, but its producer price index fell 1.8%. The CPI increase was its lowest since 2010.
Economic growth is also receding. It’s hard to pinpoint the exact figures, because Chinese economic data is notoriously sketchy. But in September, demand for electric power, a “bellwether for China economic activity,” fell 8.4% from the prior month, the second straight monthly decline.
“Deflation is the real risk in China,” stated the chief economist at a Hong Kong bank.
In Europe, deflation is no longer a possible risk; it’s reality.
In September, eleven of fifteen European Union members experienced lower goods prices, and the latest quarter-over-quarter Eurozone growth in real GDP is zero. The next chart shows the Eurostat Eurozone year-over-year change in goods prices, which is -0.3% in September.