[1/4]People walk along the Nanjing Pedestrian Street, a main shopping district, ahead of the National Day in Shanghai, China, September 26, 2023. Portal/Aly Song/File Photo Acquire License Rights
- Consumer Price Index (November) -0.5% year-on-year versus -0.2% in October
- Consumer Price Index November -0.5% month-on-month versus -0.1% in October
- November PPI -3.0% YoY versus -2.6% in October
BEIJING, Dec 9 (Portal) – China’s consumer prices fell at their fastest pace in three years in November as factory deflation deepened, pointing to increasing deflationary pressures as weak domestic demand raises doubts about the economic recovery.
The consumer price index (CPI) fell 0.5% both year-on-year and October, data from the National Bureau of Statistics (NBS) showed on Saturday.
That was lower than average forecasts in a Portal poll for a 0.1% decline both year-on-year and month-on-month. The year-on-year CPI decline was the largest since November 2020.
The figures add to recent mixed trade data and manufacturing surveys that have kept alive calls for further policy support to support growth.
Xu Tianchen, senior economist at the Economist Intelligence Unit, said the data would be alarming for policymakers, citing three main factors: falling global energy prices, the waning of the winter travel boom and a chronic supply glut.
“Downward pressure will continue to increase in 2024 as developers and local governments continue to deleverage and global growth is expected to slow,” Xu said.
Core year-on-year inflation, excluding food and fuel prices, was 0.6%, the same level as October.
Bruce Pang, chief economist at Jones Lang Lasalle, said the weak core CPI reading was a warning of continued sluggish demand, which should be a policy priority for China if the country wants to achieve more sustainable and balanced growth.
Although consumer prices in the world’s second-largest economy have hovered on the verge of deflation in recent months, China’s central bank governor Pan Gongsheng said last week that inflation was expected to “increase.”
The producer price index (PPI) fell 3.0% year-on-year, compared to a decline of 2.6% in October. This marks the 14th consecutive month of decline and the fastest since August. Economists had forecast a 2.8% decline for November.
China’s economy has faced several headwinds this year, including rising local government debt, a struggling real estate market and subdued demand at home and abroad. Chinese consumers in particular have been tightening their wallets as they fear uncertainties surrounding the elusive economic recovery.
Moody’s issued a downgrade to China’s credit rating on Tuesday, saying the costs of rescuing local governments and state-owned companies and containing the housing crisis were weighing on the economy.
China’s finance ministry called the decision disappointing, saying the economy would recover and risks could be managed.
Authorities will boost domestic demand and spur economic recovery in 2024, the Politburo, a top decision-making body of the ruling Communist Party, was quoted as saying by state media on Friday.
Markets are awaiting further government stimulus at the annual Central Economic Work Conference set later this month.
Reporting by Ellen Zhang, Ella Cao and Ryan Woo; Edited by William Mallard and Edmund Klamann
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