China Inflation Rises in December, Full Year Prices Remain Weak

Full-Year Prices Remain Weak

China: China’s annual consumer price inflation climbed to a 34-month high of 0.8% year-on-year in December, up from 0.7% in November and in line with market expectations, according to data from the National Bureau of Statistics. The increase was largely driven by higher food prices, with fresh vegetable prices rising 18.2% and beef prices up 6.9%, supported by pre–New Year holiday demand and policy measures. On a monthly basis, the consumer price index increased 0.2% in December, compared with a 0.1% decline in November. Core inflation, which excludes food and fuel, stood at 1.2% year-on-year, unchanged from the previous month.

Despite the December uptick, consumer price growth for the full year was flat, the weakest outcome in 16 years and well below policymakers’ “around 2%” target, underscoring persistently weak underlying demand in the $19 trillion economy. Producer prices remained in deflation, with the producer price index falling 1.9% year-on-year in December, easing from a 2.2% decline in November, and down 2.6% for the full year. With economic momentum slowing in the second half of the year, markets are watching for additional policy support, including monetary easing measures. The central government has allocated $8.95 billion USD from special treasury bond proceeds to local governments to continue funding the consumer goods trade-in scheme in 2026, alongside pledges to flexibly use tools such as interest rate cuts and reserve requirement ratio reductions to support growth and liquidity.

Source: Nikkei Asia