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China's CPI for December 2024 was reported to have come in at a yearly growth of 0.1%, which matched market expectations yet fell short of the November reading of 0.2%. The slight fall has continued to depress inflationary rates in the Chinese economy, as it is the weakest showing since April of last year, recorded at 0.1% for the CPI.
The Consumer Price Index, measuring price changes, showed a total growth of only 0.2% for the whole year 2024, which was far less than the expected level of around 3% target by the government. This was also the 13th consecutive year that the inflation failed to reach the projected level. In December, even the Producer Price Index showed signs of falling with a rate of 2.3% as it recorded a decline in prices for 27 months running.
Low and protracted inflation rates suggest weak domestic demand. Job insecurity and a protracted downturn in the housing market seem part of this. However, the pro-consumption policies of the government did not enhance the consumer spending level. Economists believe that the persistent deflationary forces may become a vicious cycle of lower demand and even higher savings, which would further dampen economic growth. In general, the CPI for December reflects the persistence of economic difficulties in China, mainly due to weak demand and the threat of deflation, even though the monetary policy policies are varied and intended to boost growth.
