(Dec 10): China’s consumer price growth accelerated to the fastest in over a year even as deflationary pressures remained widespread in the world’s second-biggest economy.
The consumer price index (CPI) climbed to 0.7% in November from a year earlier, after a 0.2% rise in October, according to data released by the National Bureau of Statistics on Wednesday. That matched the median forecast of economists surveyed by Bloomberg.
Factory deflation unexpectedly worsened as it extended into a 38th month, with producer prices falling 2.2%. China’s core CPI, which excludes volatile items such as food and energy, was unchanged at 1.2%.
“The larger-than-expected contraction of PPI suggests China’s deflation does not abate,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. “This should be the policy priority for 2026.”
China has been struggling with deflation since the end of the pandemic as a consequence of a prolonged slump in housing and weak consumer demand. A glut of production capacity in some industries has also led to oversupply, pushing firms to cut prices to survive.
The headline reading may not reflect the full extent of deflationary pressure in the consumer economy, especially as bullion prices soar.
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Gold jewellery prices surged 58.4% from a year ago, according to a separate statement by NBS statistician Dong Lijuan. That’s faster than the 50.3% increase in October, and likely led to a bigger boost to overall consumer prices.
The country’s gross domestic product deflator — the broadest measure of prices — has been in decline for over two years, the longest streak since the quarterly data began in 1993.
While the Chinese government has pledged to tackle the “disorderly” price competition, progress has been limited because of concerns over the risk of job losses and weaker economic growth.
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Although China’s economy is on track to achieve its growth goal of about 5% this year, nominal GDP has been expanding at a slower rate because of falling prices.
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