China faces potential deflation crisis as productivity growth stalls

People shop for food at an open air market in Shenyang, in China's northeast Liaoning province, on July 10, 2023. [AFP]

As much of the Western world continues to struggle with higher than usual rates of inflation, China faces a very different problem: potential price deflation, which could signal serious economic trouble in the future.

On Monday, official data showed that consumer prices in June had barely risen compared to a year earlier. Excluding the volatile food and energy sectors, inflation was still surprisingly low, at just 0.4% per year.