China’s economy continues to struggle, with the consumer price index (CPI) in February decreasing by 0.7% compared to the previous year, while the producer price index (PPI) decreased by 2.2%. These figures indicate that China’s economy is still facing deflationary pressures.
According to the latest data released by the Chinese National Bureau of Statistics, the CPI in February decreased by 0.7% compared to the previous year, marking the first year-on-year decline since February 2024. In urban areas, prices fell by 0.7%, and in rural areas, they also declined by 0.7%. Food prices decreased by 3.3%, while non-food prices decreased by 0.1%. Consumer goods prices dropped by 0.9%, and service prices decreased by 0.4%. These data reflect the decline in consumer goods and service prices.
In February, the CPI dropped by 0.2% compared to January, and the average CPI for January and February was down by 0.1% compared to the same period last year.
The PPI in February decreased by 2.2% compared to the previous year, with a monthly decrease of 0.1%. The average PPI for January and February dropped by 2.2% year-on-year, reflecting a decline in industrial producer prices.
It is widely believed that weak domestic demand is the main factor leading to the decline in consumer goods, service prices, and industrial producer prices.
During this year’s Two Sessions of the Chinese Communist Party, the government set the CPI target at around 2%, the lowest since 2005. Despite the series of economic stimulus and consumer promotion measures introduced by the Chinese government, the specter of deflation still lingers, and it remains difficult to dispel.