China's consumer inflation rate slowed more than anticipated in November, official data revealed Monday, as demand remains muted in the world's number two economy while prospects of new tariffs under the U.S. administration cloud future outlooks.
The country is battling sluggish domestic consumption, a persistent crisis in the property sector and rising government debt – all of which threaten Beijing's official growth target for this year.
The consumer price index (CPI), a key measure of inflation, rose 0.2% in November year-on-year, down from 0.3% in October, the National Bureau of Statistics (NBS) said.
That was below the 0.4% forecast in a Bloomberg survey of economists and a 0.5% rise forecast in a Reuters poll.
CPI fell 0.6% month-on-month, compared with a 0.3% fall in October and a forecast 0.4% decline.
NBS statistician Dong Lijuan said the faster monthly fall in CPI was mainly due to a weather-related 2.7% decline in food prices.
Core inflation, excluding volatile food and fuel prices, increased to 0.3% last month from 0.2% in October.
Beijing has announced in recent months a slew of its most aggressive measures in years aimed at boosting growth in China, which has struggled to recover since the COVID-19 pandemic.
Many major Western economies have been grappling with the threat of high inflation, but China has instead been battling low or negative prices.
China sank into deflation for four months at the end of 2023, with the sharpest contraction in consumer prices in 14 years in January.
In the factory sector, the producer price index (PPI) fell 2.5% year-on-year in November, a slower decline than the 2.9% in October and the forecast 2.8% fall but extending declines for 26 months.
That extends a deflationary run that began in late 2022.
"Core inflation edged up and PPI deflation eased, suggesting that stimulus measures support underlying price pressures to some degree. Even then, we expect overcapacity will keep inflation low into 2025 and beyond," said Gabriel Ng, assistant economist at Capital Economics.
Beijing has unveiled a string of measures since September aimed at bolstering growth, including cutting interest rates, canceling restrictions on homebuying and easing the debt burden on local governments.
Yet, economists have warned that more direct fiscal stimulus aimed at shoring up domestic consumption is needed to restore full health in China's economy.
"Economic activities stabilized recently, but the recovery is not strong enough to boost inflation yet," Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note.
"It requires a much stronger fiscal push to get China out of the deflationary environment," he said.
Chinese government advisers are calling for an economic growth target of around 5.0% for 2025, pushing for stronger fiscal stimulus to mitigate the impact of expected U.S. tariff hikes on the country's exports, Reuters reported.
However, economists are still broadly gloomy about China's economic prospects, which face fresh trade tariffs from a new Trump presidency next year and a still shaky property sector.
Fitch Ratings lowered its economic forecasts for China for 2025 to 4.3% from 4.5% and for 2026 to 4.0% from 4.3% on Monday, citing risks of even higher U.S. tariffs on Chinese goods.
