Chinese Consumer Price Index and Producer Inflation in December 2024

Chinese consumer price index (CPI) inflation grew marginally in December, as expected, while producer inflation contracted. This signals that deflation remains largely prevalent, despite recent stimulus measures.

CPI grew 0.1% year-on-year in December, in line with expectations, according to government data released on Thursday. This reading was softer than the 0.2% growth seen in the previous month.

CPI was unchanged on a month-on-month basis.

The weak CPI print for December indicates that Chinese consumer spending experienced little growth towards the end of the year. Heightened uncertainty surrounding the country’s economic outlook has sparked increased caution among consumers.

Beijing had announced a series of stimulus measures in late-2024, aimed at supporting growth. While these measures did spur some improvements in business activity, they left consumers unimpressed.

On the business front, producer price index (PPI) inflation shrank 2.3% in December, slightly less than expectations for a 2.4% contraction, and showing marginal improvement from the 2.5% drop observed in the previous month.

This reading marks the 27th consecutive month of contraction in China’s factory gate inflation, as the country’s factories continue to grapple with sluggish local demand, overcapacity, and muted input costs.