Chinese consumer prices are barely rising because of deflationary pressure
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China’s consumer prices barely rose in December, underscoring deflationary pressures in the world’s second-largest economy that have pushed bond yields to record lows.
Consumer price growth was 0.1 percent year-on-year last month, in line with a Reuters average analyst forecast and the slowest in nine months. The value published on Thursday was below the growth of 0.2 percent in the previous month.
The producer price index, which measures factory gate prices, fell 2.3 percent, slightly better than analyst estimates of a 2.4 percent decline and a 2.5 percent decline in November. The December value means that the value has been in deflationary territory for 28 months.
China’s economy has been flirting with outright deflation for months as a three-year housing downturn erodes consumer demand and pushes the industry into oversupply.
Beijing is expected to meet its 5 percent economic growth target for 2024 through a mix of booming exports, whose price competitiveness in overseas markets has been boosted by deflation at home, and government stimulus measures.
But analysts warn that the formula is unraveling as new US President Donald Trump threatens damaging tariffs that could lead to a sharp slowdown in Chinese export growth.
Beijing also struggled to stimulate domestic demand, although… monetary policy turning point in September This was primarily aimed at the stock market and attempted to increase the wealth of private households through higher stock prices.
The yield on China’s benchmark 10-year government bond has hovered at a record low since the start of the year, reflecting investor expectations of a weak, deflationary economic outlook, analysts said.
Chinese stocks were mixed in early trading on Thursday. The benchmark CSI 300 index was flat, while Hong Kong’s Hang Seng index rose 0.4 percent. 10- and 30-year Treasury yields remained unchanged.
In foreign exchange markets, the renminbi remained unchanged at RMB7.33 against the dollar after the People’s Bank of China set the daily trading rate at RMB7.19.
China’s currency can be traded within 2 percent of the daily rate set by the central bank.
