Chinese Consumer Inflation Declines

Chinese consumer inflation shrank more than expected in November as stimulus measures failed to counter a persistent deflationary trend, with producer inflation also contracting.

Consumer price index (CPI) inflation fell 0.6% month-on-month in November, according to government data released on Monday. This drop was worse than the anticipated decrease of 0.4% and worsened from a 0.3% contraction in the previous month.

Year-on-year, CPI grew only 0.2%, below the expected 0.5% and down from a 0.3% growth in the prior month.

This indicates that despite some improvements in certain sectors due to aggressive stimulus from Beijing, consumer spending remained weak. Investors are increasingly calling for more targeted fiscal measures to boost private consumption.

Additionally, weak producer price index (PPI) data revealed that factory gate inflation remained subdued, even with a slight uptick in business activities throughout November. PPI inflation shrank by 2.5% in November, slightly better than expectations of a 2.8% decline and an improvement over the 2.9% seen in October.

However, this reading marks over two years of consistent PPI inflation declines, as factories in China face sluggish local demand.

Attention is now on two significant political meetings occurring in China in December, which are expected to provide further insight into the economic outlook and Beijing's stimulus plans.