Customers purchase fruit at a supermarket on December 9, 2024 in Qingzhou, Shandong Province of China.
Vcg | Visual China Group | Getty Images
China’s consumer prices in December edged up 0.1% year on year, in line with expectations, data from the National Bureau of Statistics showed Thursday, but the slower rise from the previous month stoked deflation concerns.
Analysts polled by Reuters had expected the consumer price index to slip to 0.1% in December from 0.2% in November on a year-on-year basis.
China’s producer price inflation fell by 2.3% year on year in December, declining for the 27th month. The reading is slightly better than Reuters estimates of a 2.4% decline .
The ongoing near-zero consumer inflation indicates that China continues to struggle with weak domestic demand that has raised the specter deflation.
Consumption has failed to pick up despite a range of stimulus measures introduced by Beijing since last September, which encompassed interest rate reductions, support for the stock and property markets and increased bank lending.
As recent as Wednesday, China expanded its consumer trade-in scheme aimed at spurring consumption through equipment upgrades and subsidies.
Certain metrics, however, signal China’s economy could see some recovery. The country’s factory activity has been expanding for the past three months, although the pace of expansion slowed in December.
“Although China’s economy displayed some signs of recovery following the policy shift in September, it continues to face significant challenges,” said Carlos Casanova, a senior economist at private bank Union Bancaire Privée, citing the country’s property sector headwinds and trade tensions with the U.S.
Louise Loo, lead economist at Oxford Economics expects that China’s path to reflation will still underwhelm most estimates given the enduring weakness in consumer spending appetite.
China’s onshore yuan on Wednesday hit a 16-month low of 7.3316 against the dollar as Treasury yields rose and the dollar strengthened.