China is sneezing, world may catch a cold

Mumbai: Large parts of the world are tackling high inflation these days, but not China. Retail prices in the country fell by 0.3% in the 12-month period ending July. A scenario of falling prices is referred to as deflation and is the opposite of inflation. Deflation has been primarily driven by falling food prices. Food and tobacco prices in July contracted by 0.5%, primarily on account of a fall in the price of pork—China's favourite meat—by 26%. Now, a single month of falling retail prices doesn't exactly mean that China is entering an environment of short or medium term deflation….