Stay informed with free updates
Just log in the Chinese economy myFT Digest — delivered straight to your inbox.
China’s consumer prices barely rose in December, underscoring deflationary pressures that have pushed bond yields to record lows in the world’s second-largest economy.
Consumer prices rose 0.1 percent from a year earlier last month, according to official figures released on Thursday by the Bureau of National Statistics, in line with an average analyst forecast from Reuters and the slowest in nine months. The reading was lower than the 0.2 percent increase in the previous month.
The weak inflation reading came despite months of efforts by policymakers to stimulate demand. China’s leaders announced in December that the country would formally adopt a “moderately loose” monetary policy for the first time in 14 years and work to “vigorously increase consumption.”
The producer price index, which measures factory-gate prices, fell 2.3 percent, slightly better than analysts’ estimates of a 2.4 percent decline and a 2.5 percent contraction in November, but leaving the metric in territory deflationary for the 27th month.
China’s economy has flirted with outright deflation as a three-year property slump has undermined consumer demand, pushing the industry into oversupply.
Beijing is expected to meet its 5 percent economic growth target for 2024 thanks to a combination of government stimulus measures and booming exports, whose price competitiveness in overseas markets has been overwhelmed by deflation at home.
Some content could not be loaded. Check your internet connection or browser settings.
But analysts warn that the formula has weakened, with incoming US President Donald Trump threatening damaging tariffs that could prompt a sharp slowdown in China’s export growth.
Beijing has announced multiple stimulus measures, including a monetary policy stance in September that primarily targeted the stock market and sought to boost household wealth through higher capital prices.
China’s state planner on Wednesday also expanded a subsidy program to encourage consumers to trade in old appliances such as microwaves, rice cookers and dishwashers for newer models.
Economists have raised doubts that such measures will be enough to revive the economy, forecasting consumer prices to remain virtually flat this year and factory prices to continue a more than two-year run of deflation.
Analysts at Standard Chartered noted “downside risks” to the consensus forecast of 0.9 percent inflation this year.
“Headline CPI inflation may turn negative and remain below 0.5 percent for most of 2025,” they wrote in a research note, adding that output prices could fall by 2.5 percent. .
The yield on China’s benchmark 10-year government bond has hovered around record lows since the start of the year, which analysts said reflected investor expectations of a deflationary outlook for the low-growth economy.
Chinese stocks and 10-year and 30-year sovereign bond yields were flat on Thursday.
In currency markets, the renminbi was flat against the dollar at Rmb7.33 after the People’s Bank of China fixed the daily trading rate at Rmb7.19.
China’s currency is allowed to trade within 2 percent of the daily exchange rate set by the central bank.
