Customers buy vegetables in a supermarket in Nanjing, China.
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Data from the National Bureau of Statistics showed that China’s consumer price growth fell to a five-month low in November, which was lower than expected and rose 0.2% from the same period last year. The National Bureau of Statistics announced on Monday.
Analysts polled by Reuters had expected retail inflation to edge back up to 0.5% in November from a year earlier, compared with 0.3% in October.
Core inflation, which excludes volatile food and fuel prices, rose to 0.3% in November from 0.2% in October.
The prices of pork and fresh vegetables increased by 13.7% and 10.0% respectively compared with the same period last year.
China’s producer price index, or wholesale inflation, fell for the 26th consecutive month. Producer inflation fell 2.5% year-on-year in November, lower than the 2.8% decline expected in a Reuters poll.
Industrial producer purchasing price indexAmong them, the price of ferrous metal materials led the decline by 7.1%. Fuel power fell by 6.5%, and chemical raw materials fell by 5%.
Erica Tay, head of macro research at Maybank, said that while China’s producer price index (PPI) deflation has narrowed slightly, it still appears to be quite entrenched.
“The accumulated inventories of manufacturing inputs and finished goods are quite large and increasing month by month. The mismatch between supply and demand has been driving down prices,” she told CNBC via email.
Continued retail inflation near zero suggests China is still grappling with weak domestic demand, while wholesale prices remain in deflationary territory. This is despite Beijing’s series of stimulus measures since September These include cutting interest rates, supporting stock and housing markets and efforts to increase bank lending.
Becky Liu, head of China macro strategy at Standard Chartered Bank, said of the ongoing trade war between China and the United States: “We believe deflation in China will continue, especially based on the experience during previous trade wars.”
She said: “Inflation, especially producer price index (PPI) inflation, usually falls to negative values during this period, and this time is no exception.” Liu said China’s producer price index inflation may be at It will remain negative throughout 2025.
Goldman Sachs analysts wrote in a report on December 6 that China’s CPI data is also expected to continue to be close to zero next year.
However, there are some signs of recovery in other areas of the Chinese economy. The world’s second largest economy Retail sales grow strongly in Octoberexceeding Reuters’ expectations. Manufacturing activity in China has also expanded two months in a row.
China’s top leaders will hold the annual Central Economic Work Conference on Wednesday to set economic targets and stimulus measures for 2025.
On Monday, Fitch Ratings lowered China’s GDP growth forecast for 2025 to 4.3% from 4.5%. The credit rating agency also cut its 2026 growth forecast to 4.0% from 4.3% in September.
Brian Coulton, chief economist at Fitch Ratings, wrote in the report: “We believe that in 2025 and 2026, U.S. trade policy towards China will see a sharp protectionist turn.” “Initial signs of stabilization”, but a prolonged downturn in the housing market poses a major risk to the agency’s forecasts.
China will also release November trade data on Tuesday and retail sales data next Monday.
