China's Consumer Prices Sink, Factory-Gate Deflation Worsens

China's consumer prices fell at the fastest rate in three years in November, while factory-gate deflation deepened, indicating rising deflationary pressures as weak domestic demand casts doubt over the economic recovery, Ellen Zhang, Ella Cao, and Ryan Woo reported for Reuters.

The Consumer Price Index (CPI) dropped 0.5% both from a year earlier and compared with October. I Photo: N509FZ

The Consumer Price Index (CPI) dropped 0.5% both from a year earlier and compared with October, according to data from the National Bureau of Statistics (NBS) released recently.

This was deeper than the median forecasts in a Reuters poll, which predicted 0.1% declines both year-on-year and month-on-month. The year-on-year CPI decline was the steepest since November 2020.

These numbers add to recent mixed trade data and manufacturing surveys that have kept calls for further policy support to shore up growth alive.

Xu Tianchen, senior economist at the Economist Intelligence Unit, said the data would be alarming for policymakers and cited three main factors behind it: falling global energy prices, the fading of the winter travel boom, and a chronic supply glut.

"Downward pressure will continue to rise in 2024 as developers and local governments continue to deleverage and as global growth is expected to slow," Xu said.

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