China CPI inflation stays flat in Dec, PPI shrinks amid limited stimulus support

Chinese consumer price index inflation grew marginally in December, as expected, while producer inflation contracted, signaling that deflation still remained largely prevalent despite recent stimulus measures.

CPI grew 0.1% year-on-year in December, in line with expectations, government data showed on Thursday. The reading was softer than the 0.2% growth seen in the prior month.

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

The weak CPI print for December showed Chinese consumer spending saw little growth towards the end of the year, as heightened uncertainty over the country’s economic outlook sparked increased caution among consumers.

Beijing had announced a flurry of stimulus measures in late-2024, aimed at supporting growth. But while these measures spurred some improvement in business activity, consumers were left unimpressed.

On the business front, producer price index inflation shrank 2.3% in December, slightly less than expectations for a 2.4% contraction, and improving marginally from the 2.5% drop seen in the prior month.

The reading marked a 27th consecutive month of contraction in China’s factory gate inflation, as the country’s factories grappled with sluggish local demand, overcapacity, and muted input costs.