Bankinter | China’s inflation data remained unchanged in December and CPI ended at 0.1%, in line with expectations. The Underlying Rate rises one tenth of a percentage point to 0.4% year-on-year. Producer prices closed at 2.3% down year-on-year, slightly better than the 2.4% expected versus 2.5% previously.
Analysis team’s view: Inflation continues to weaken and to approach 0% and to reach the lowest since March 2024, while Industrial Prices remain negative. In December food (down 0.5% year-on-year), household products (down 0.7%) and transport & communications (down 2.2%) continue to put downward pressure on inflation. The rebound in the core rate is encouraging, but still well below pre-pandemic levels of >1.5%. Average inflation stands at 0.2% in 2024 for the second year in a row, reaching the lowest level since deflation of 0.7% in 2009. The stimuli approved so far by the government are failing to bring about a significant recovery in consumer confidence and domestic demand, pointing to the need for further measures to curb the deflationary trajectory of prices.
