First the pandemic and now floods are slashing the spending power of Chinese households this year, as stagnant incomes and rising costs undermine the strength of the domestic recovery.
That trend may also be worsening China’s already severe income inequality, according to data from the National Bureau of Statistics. The median disposable income — about $1,000 per quarter — actually fell as the virus lockdowns hit, and the fact that it’s recovering slower than the mean likely indicates a widening gap with wealthy Chinese.
On top of that, food prices are rising faster as the pandemic has slowed imports and flooding in central China damaged food crops and transport links. Food inflation began rising in June after starting to slowing early this year, and that trend will likely continue over the summer.