Falling pork prices are definitely 'helping' - Pork price declines enhance domestic demand

Deflation is such a negative word that journalists don’t think more deeply about the market forces at play. Here, CNBC warns that falling consumer prices are “not helping”:

Plunging pork prices in China are pushing the world’s second largest economy closer to deflation, in what could be another blow to its faltering economy.

China’s economy is not on strong footing now, but pork prices are a necessary consumer commodity for most people. Taking pressure off the consumer’s pocketbook is not a bad thing.

Of course, the ultimate reason for this deflation is over-capacity, as in most industries in China. Easy loans lead to companies chasing the high profits from last year.

This really highlights the use of the terms deflation and inflation. When US food or gas prices ease, it is presented not as deflation, but as a reduction in inflation. A good thing, in other words.

Pork prices are fundamentally tied to people's food expenses, like rice but of course somewhat weaker. As food costs ease, consumers have more to play with, and rather than signaling negatively, it signals positively, contra this WSJ headline.

The same problem occurs when we talk about wage inflation. Yes, it's inflation, but rising wages are, again, good for society. Wage inflation is a big deal to some labor-intensive companies, but for many, many others it means consumers with more spending capacity.

We will see real deflation, but food prices are not the tip of the spear. Housing prices mostly, but commodities as well.