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 rebound slightly 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 comes despite Beijing taking a series of stimulus measures since September, including cutting interest rates, supporting stock and real estate markets and working 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 in 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 also some signs of recovery in other areas of the Chinese economy. The world’s second-largest economy reported strong retail sales growth in October, beating Reuters expectations. China’s manufacturing activity also expanded for two consecutive months.
China’s top leaders will convene the annual Central Economic Work Conference on Wednesday to set economic targets and stimulus measures for 2025.
On Monday, Fitch Ratings lowered China’s 2025 GDP growth forecast from 4.5% to 4.3%. 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 U.S. trade policy towards China will see a sharp protectionist turn in 2025 and 2026.” “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.
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