China’s consumer inflation slowed further in December, sparking deflation fears | Wilnesh News

China’s consumer price in December A slight increase of 0.1% year-on-year, in line with expectationsBut growth slowed from last month, raising concerns about deflation, data released by the National Bureau of Statistics showed on Thursday.

Analysts polled by Reuters had expected the annual consumer price index to fall to 0.1% in December from 0.2% in November.

China’s industrial producer prices fell 2.3% year-on-year in December, falling for the 27th consecutive month. The data was slightly better than Reuters’ forecast of a 2.4% decline.

Persistently near-zero consumer inflation suggests China continues to struggle with weak domestic demand, which is fueling the specter of deflation.

Consumption has failed to pick up despite Beijing taking a series of stimulus measures since September, including cutting interest rates, supporting the stock and real estate markets and increasing bank lending.

Just Wednesday, China expanded its consumer trade-in program aimed at stimulating consumption through: Equipment upgrades and subsidies.

However, some indicators suggest China’s economy may be recovering. Factory activity in the country has been expanding over the past three months, although the pace of expansion slowed in December.

Carlos Casanova, senior economist at private bank Union Bancaire Privée, said, “Although China’s economy shows some signs of recovery after September’s policy shift, it still faces significant challenges.” He listed China’s real estate sector faces headwinds as well as trade tensions with the United States.

Louise Loo, chief economist at Oxford Economics, expects China’s reflation path to remain lower than most expectations given continued weakness in consumer willingness to spend.

China’s onshore yuan hit a 16-month low of 7.3316 against the dollar on Wednesday as U.S. Treasury yields rose and the dollar strengthened.