People buy Spring Festival ornaments at a market in Zixing city, central China’s Hunan province, Feb. 4, 2024.
CFOTO | Future publication | Getty Images
Producer prices in China fell for the sixteenth month of January, while consumer prices fell for the fourth month. The data underlines the scale of the challenge Beijing faces in reviving the world’s second-largest economy.
China’s producer price index fell 2.5% in January from a year earlier, the National Bureau of Statistics reported Thursday, slightly better than expectations of a 2.6% decline, after a decline of 2.7% in December.
The country’s consumer price index fell 0.8% in January on a year-on-year basis, more than the median estimate of a 0.5% decline in a Reuters poll. The consumer price index fell 0.3% in December. On a monthly basis, however, the consumer price index rose 0.3% in January compared to December, slightly below median expectations of 0.4% growth.
NBS said January inflation data was affected by the high base effect of the Spring Festival or Lunar New Year, which fell in January a year ago. The festival falls in February this year.
The core CPI – which excludes energy and food prices – rose 0.4% in January from a year earlier, the bureau said in a separate statement. On a monthly basis, this translated into growth of 0.3% in January compared to December, NBS said.
Inflation data released Thursday underlines lingering fears that China is on the brink of deflation. The tepid prices highlight what China’s top leaders have labeled a “torturous” economic recovery after the country emerged from draconian zero-Covid restrictions in late 2022.
China is a stark exception among the world’s major economies, which are mostly doggedly battling high inflation. The latest official and private surveys of manufacturing activity have shown that growing market competition has limited the bargaining power of Chinese companies, depressing production prices.
Consumer confidence and broader growth in China’s economy have been hit hard by the collapse of the property market after Beijing cracked down on developers’ high reliance on debt for growth in 2020.
This is a developing story. Please check back for further updates.