BEIJING: China's annual consumer price inflation accelerated to a 34-month high in December, but the full-year rate slumped to the lowest in 16 years while producer deflation persisted, backing market expectations for more stimulus to shore up soft demand.
Imbalances in the US$19 trillion economy have worsened over the past year, even as growth is on course to meet Beijing's target of "around 5 per cent" for 2025, buoyed by policy support and resilient goods exports.
US President Donald Trump's global trade war has added to persistently soft consumer demand, which has remained a drag on confidence and growth for years amid a prolonged property crisis.
The December consumer price index (CPI) rose 0.8 per cent from the same month in 2024, National Bureau of Statistics (NBS) data showed on Friday (Jan 9), matching expectations in a Reuters poll and perking up from the 0.7 per cent increase in November.
The rise was mainly driven by food prices, especially those of fresh vegetables and beef, which expanded 18.2 per cent and 6.9 per cent respectively, Dong Lijuan, a statistician at NBS, said in a statement. Pre-New Year holiday shopping and supportive policies also helped boost consumer prices, Dong added.
Chinese policymakers have repeatedly pledged to support a rebound in prices with monetary policy and have cracked down on excessive competition. They have also vowed to boost people's income to unleash consumption potential and better align the country's supply and demand.
Yet, the underlying demand impulse in the economy remains weak.
"Despite expectations of a recovery, inflation remains relatively low and should not preclude further monetary easing this year," said Lynn Song, ING's chief economist for Greater China.
Zichun Huang, China economist at Capital Economics, said the elevated headline CPI was not due to the government campaign to curb so -called "involution", adding that overcapacity and deflationary pressures will persist in the coming years in the absence of stronger demand-side measures.
Indeed, for the entire 2025, consumer price growth was flat, well below the "around 2 per cent" goal policymakers were aiming for, a sign that stimulus measures, such as a consumer goods trade-in scheme, have yielded only modest results in lifting sentiment and containing deflationary pressure.
Pork prices fell 14.6 per cent year-on-year in December, while prices of gold jewellery surged 68.5 per cent, NBS data showed.
Core inflation, which excludes volatile prices of food and fuel, rose 1.2 per cent year-on-year last month, unchanged from November.
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