Developing | China stuck in low consumer inflation for two consecutive years

Despite a series of aggressive fiscal stimulus measures, China’s consumer prices rose by just 0.2 per cent last year, with analysts noting that the world’s second-largest economy continues to face significant challenges in overcoming deflation and revitalising domestic demand.

The consumer price index (CPI), a key measure of inflation, rose by 0.1 per cent year on year last month, the National Bureau of Statistics (NBS) said on Thursday, lower than the estimated growth of 0.16 per cent in a poll by Wind, after a 0.2 per cent increase in November.

While the annual CPI reading remained in positive territory at 0.2 per cent, unchanged from the 0.2 per cent growth recorded in 2023, it matched the lowest level since 2009 and was well below the official control target of 3 per cent.

Meanwhile, the producer price index (PPI), which tracks factory gate prices, fell by 2.3 per cent in December, in line with market expectations, marking the 27th consecutive month of decline.

PPI fell by 2.2 per cent last year, following a 3.0 per cent decline in 2023.

Since April 2023, China’s CPI growth has hovered around zero, sparking market concerns about deflationary pressures and weak demand.

Economists say that while China has introduced more robust and coordinated stimulus measures amid growing economic headwinds, both domestic and global challenges could weigh on recovery efforts in 2025.