Inflation in China decreases in December, fueling concerns about deflation.
- The National Bureau of Statistics revealed on Thursday that China's consumer prices in December increased by 0.1% year on year, as anticipated, but the slower growth compared to the previous month raised deflation concerns.
The National Bureau of Statistics revealed on Thursday that China's consumer prices in December increased by 0.1% year on year, as anticipated, but the slower growth compared to the previous month raised deflation concerns.
According to Reuters, analysts predicted that the consumer price index would decrease from 0.2% in November to 0.1% in December on a year-on-year basis.
In December, China's producer price inflation decreased by 2.3% year on year, marking the 27th month of decline. This reading is slightly better than Reuters' estimate of a 2.4% decline.
Despite ongoing near-zero consumer inflation, China is still grappling with weak domestic demand, which has brought about the possibility of deflation.
Despite the stimulus measures introduced by Beijing since last September, including interest rate reductions, support for the stock and property markets, and increased bank lending, consumption has not picked up.
On Wednesday, China launched an expanded consumer trade-in scheme to boost consumption by offering equipment upgrades and subsidies.
Despite a slowdown in the pace of expansion in December, China's factory activity has been expanding for the past three months, indicating some potential for economic recovery.
Despite some recovery in China's economy after the policy change in September, the country still faces significant challenges, including property sector headwinds and trade tensions with the U.S., according to Carlos Casanova, a senior economist at private bank Union Bancaire Privée.
Oxford Economics' lead economist, Louise Loo, predicts that China's reflation path will disappoint most estimates due to the persisting weakness in consumer spending demand.
On Wednesday, the onshore yuan of China reached a 16-month low of 7.3316 against the dollar due to rising Treasury yields and a strengthening dollar.
China Economy
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