BEIJING: China’s consumer inflation slowed in December, leading to modest annual price gains for 2024 while factory-gate deflation extended into a second year, amid sputtering economic demand.
A combination of job insecurity, a prolonged housing downturn, high debt and tariffs threats from the incoming administration of U.S. President-elect Donald Trump has hit demand, even as Beijing ramps up stimulus to revive its consumer sector.
The consumer price index crept up 0.1% last month year-on-year, slowing from November’s 0.2% increase and the weakest pace since April, data from the National Bureau of Statistics showed on Thursday.
That was in line with forecasts in a Reuters poll of economists.
CPI was flat month-on-month, against a 0.6% decline in November and matching forecasts.
Core inflation, excluding volatile food and fuel prices, nudged up 0.4% last month from 0.3% in November, the highest in five months.
Full-year CPI rose 0.2%, in line with the previous year’s pace and below the official target of around 3% for last year, suggesting inflation missed annual targets for the 13th straight year.
In addition to an electric vehicle price war that is entering its third year, discounting is now broadening across the retail sector to include bubble tea shops.
Cautious consumers have increasingly opted to rent items from cameras to handbags, instead of buying them.
Upstream, the producer price index fell 2.3% year-on-year in December, slower than the 2.5% fall in November and an expected 2.4% decline. Factory-gate prices have now fallen for 27 straight months.
In late December, the World Bank upgraded its forecast for China’s economic growth in 2024 and 2025 but warned that subdued household and business confidence, along with property sector headwinds, would remain a drag.
China has agreed on a record $411 billion worth of special treasury bond insurance, Reuters reported, as Beijing cranks up fiscal stimulus to revive a faltering economy.
China’s inflation weakens as new risks cloud horizon
Beijing will sharply increase funding from ultra-long treasury bonds in 2025 to spur business investment and consumer-boosting initiatives, the state planner said last week.
Authorities have earmarked $41 billion in funds from government bonds in July to finance equipment upgrades and trade-ins of consumer goods including autos.
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