China remains stuck in low consumer inflation for second year

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 growth of 0.16 per cent estimated 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.

Economists and officials have said 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 this year.