China: Threat of Deinflation Increases Fears of Depression · Global Voices

Consumer price inflation (IMF) in December declined to 0.1% on an annual basis, the National Statistical Office data showed on Thursday, inciting concerns about deflation and growth. The increase in total inflation in China was in line with Reuters’s estimates, but less than the 0.2% increase in November, as an indication that government measures to stimulate consumption did not yield expected and the recession is visible. CORVERSE The core of inflation, which does not include food and energy prices, increased by 0.4% annually compared to a 0.3% increase last month, as evidence showed. On a monthly basis, China’s ICC remained unchanged, compared to the 0.6% drop last month. Food prices decreased by 0.6% on a monthly basis as a result of favourable weather conditions, official statistics showed. Prices of fresh vegetables and fruit fell by 2.4% and 1% respectively. Prices of pigmeat, which is an important part of the ICC basket, decreased by 2.1%. CORVERSE “The ICC General will be negatively affected by the weaker price of pork in 2025,” ANZ Bank analysts wrote in a note, according to CNBC. On an annual basis, prices of pigmeat and fresh vegetables remain rising, rising 12.5%. Wholesale prices (PPI) continued to decrease for a 27th consecutive month, with inflation in China’s producer prices decreasing by 2.3% annually in December. The measurement was slightly better than Reuters’s estimates for a 2.4% reduction. On a monthly basis, PPI retreated by 0.1% compared to a 0.1% increase in November, as infrastructure and real estate projects were temporarily suspended during the off-season, according to the National Statistical Office, hitting demand for steel. The continuing almost zero consumer inflation shows that China continues to struggle with the weak domestic demand that has raised the spectrum of deflation. Consumption has been unable to recover but a number of stimulus measures introduced by Beijing since last September, including interest rate cuts, support for stock and real estate markets and an increase in bank lending.