Pedestrians pass a Huawei Technologies Co. flagship store in Shenzhen, China, on Wednesday, Oct. 8, 2025.
Qilai Shen | Bloomberg | Getty Images
China’s consumer prices fell more than expected in September, while the deflation in producer prices persisted, underscoring the impact of sluggish domestic demand and trade worries on consumer and business sentiment.
The consumer price index fell 0.3% in September from a year earlier, National Bureau of Statistics data showed on Wednesday, a sharper decline than economists’ forecast of 0.2% slide, although easing from the 0.4% drop in August.
Prices ticked up 0.1% month-on-month, a smaller than expected recovery compared to economists’ forecast for 0.2% increase.
Core CPI, which strips out volatile food and energy prices, rose 1.0% from a year earlier, the highest since February 2024, according to data from Wind Information.
Despite the “positive sign” of improvement in the core CPI, “trade tension returned and growth outlook uncertainty heightened, which is negative for demand recovery,” said Zhiwei Zhang, president and chief economist, at Pinpoint Asset Management.
“It is too early to conclude that the deflationary pressure is fading at this stage,” Zhang added.
China’s producer price index dropped 2.3% from a year ago, in line with economists’ forecast, official data showed. The deflation, however, eased for a second month, with price declines narrowing from 2.9% in August and 3.6% in July.
The producer price downturn has persisted for almost three years, hurting profitability of manufacturers who have had to weather tepid consumer confidence and production disruption stemming from U.S. trade policies.
Weak consumer demand has weighed on China’s economy that’s struggling from a prolonged housing downturn, while U.S. tariffs have pressured exports.
While China’s overall exports have grown this year, U.S.-bound shipments have seen double-digit declines since April.
Dong Lijun, NBS spokesperson, attributed the decline in CPI to “tail effect,” or impact from the higher price level last year, saying that excluding the “tail effect,” consumer prices rose 0.5% from a year ago.
Among the categories that saw the biggest declines were food and energy, which saw prices fall 4.4% and 2.7%, respectively.
Industrial consumer goods, most notably gold and platinum jewelry prices soared 42.1% and 33.6% on the back of a global gold rush, Dong said.
Costs for accommodations and air tickets fell 1.5% and 1.7%, respectively, in September, as hotel owners, flight carriers and travel agencies suffered a bruising price war, vying for orders ahead of the eight-day Golden Week holiday that stretched from Oct. 1 to 8.
The latest economic prints served as “a stark reminder of the significant structural challenges that China must overcome to rebalance its economy,” said Alfredo Montufar-Helu, managing director at Ankura Consulting’s GreenPoint Business, citing softening demand, persistent overcapacity and intense price competition.
These are “putting business resilience to the test like never before,” added Montufar-Helu.