Customers buy fruit at a supermarket on December 9, 2024 in Qingzhou, China’s Shandong province.
Vcg | Visual China Group | Getty Images
Chinese consumer prices in December rose by 0.1% year-on-year, in line with expectationsdata from the National Bureau of Statistics showed on Thursday, but slower growth compared to the previous month fueled concerns about deflation.
Analysts polled by Reuters had expected the consumer price index to fall to 0.1% in December from 0.2% in November on an annual basis.
Producer price inflation in China fell 2.3% year-on-year in December, falling for the 27th month. The reading was slightly better than Reuters estimates of a 2.4% decline.
Current consumer inflation near zero suggests that China continues to struggle with weak domestic demand that has increased spectral deflation.
Consumption has failed to pick up despite a series of stimulus measures introduced by Beijing since then last Septemberwhich included a reduction in interest rates, support for stocks and real estate markets, and increased bank lending.
As recently as Wednesday, China expanded its consumer exchange scheme to boost spending equipment upgrade and subsidies.
Certain indicators, however, signal that China’s economy may be recovering. Earth factory activity expanded in the past three months, although the pace of expansion slowed in December.
“Although China’s economy has shown some signs of recovery after the policy change in September, it still faces significant challenges,” said Carlos Casanova, senior economist at private bank Union Bancaire Privée, citing problems in the country’s real estate sector and trade tensions with the U.S. -om.
Louise Loo, chief economist at Oxford Economics, expects China’s path to reflation to continue to fall short of most estimates given the persistent weakness in consumer appetite for spending.
Chinese mainland yuan it hit a 16-month low of 7.3316 against the greenback on Wednesday as Treasury yields rose and the greenback strengthened.
