top of page

China Consumer Prices Drop, Raising Concerns Over Domestic Demand and Growth Targets

China's consumer prices for November unexpectedly fell by 0.5% month-over-month, contrary to expectations of a 0.1% rise. Year-over-year, consumer prices are now down by 0.5%. This marks the steepest decline in three years and highlights the ongoing malaise in domestic demand.

Producer prices also fell more than expected, recording a 3.0% drop year-over-year.

While some of the weakness in the headline CPI can be attributed to lower pork prices (which have a significant weight in the CPI calculation), it's evident that weak domestic demand is intensifying deflationary pressures. Ongoing issues in the property sector continue to impact consumer sentiment and demand negatively.

Our take: Significant efforts are needed from fiscal policy to bolster sentiment and demand. Although China's leaders have recently announced more appropriate actions, it remains to be seen whether these measures will be sufficient to achieve next year's growth target of 5%.


bottom of page