China’s consumer inflation has hit a five-month low, with the consumer price index (CPI) rising 0.2% in November, below expectations. Factory deflation persists despite stimulus efforts, leaving economists pessimistic about the country’s economic outlook.
The slowdown in CPI was largely driven by fresh food prices, which fell 0.6% month-on-month, led by a 2.7% decline in November due to warmer-than-usual weather conditions. Core inflation, excluding volatile food and fuel prices, edged up to 0.3%.
However, the factory sector saw producer price index (PPI) fall 2.5% year-on-year, a slower decline than forecast, but still extending declines for 26 months.
Despite recent efforts to boost economic demand, economists remain gloomy about China’s prospects. The country is bracing for likely fresh tariffs from a new Trump presidency and still dealing with other headwinds. To address these challenges, Chinese government advisers are calling for stronger fiscal stimulus to mitigate the impact of expected U.S. tariff hikes on exports.
Fitch Ratings has lowered its economic forecasts for China, predicting 4.3% growth in 2025 and 4.0% growth in 2026, citing risks of higher U.S. tariffs on Chinese goods. With the global economy still facing uncertainty, it remains to be seen whether Beijing’s stimulus measures will be enough to shore up fragile growth.
Source: https://www.reuters.com/markets/asia/chinas-consumer-inflation-hits-five-month-low-november-2024-12-09