China’s consumer price index rose 0.8 percent year-on-year in December 2025, marking the highest level since February 2023. While factory-gate deflation eased slightly, persistent producer price declines highlight ongoing economic challenges. These figures underscore a fragile recovery amid policy efforts to stimulate demand.
The National Bureau of Statistics reported the consumer price index (CPI) increased to 0.8 percent year-on-year in December, up from 0.7 percent in November and matching economist forecasts. Food prices drove much of the uptick, rising 1.1 percent year-on-year, with fresh vegetables up 18.2 percent, fresh fruits 4.4 percent, beef 6.9 percent, mutton 4.4 percent, and aquatic products 1.6 percent. Pork prices fell 14.6 percent, though the decline narrowed.
Core CPI stability
Core CPI, excluding food and energy, held steady at 1.2 percent year-on-year, signaling underlying demand stability above 1 percent for four months. Urban CPI grew 0.9 percent, outpacing rural areas at 0.6 percent, while non-food prices rose 0.8 percent. On a monthly basis, CPI climbed 0.2 percent, reversing November’s 0.1 percent drop, boosted by industrial consumer goods excluding energy, up 0.6 percent.
The producer price index (PPI) fell 1.9 percent year-on-year, milder than November’s 2.2 percent drop and ahead of the 2.0 percent forecast. Monthly PPI rose 0.2 percent, the third consecutive gain, driven by sectors like coal mining, lithium-ion batteries, cement, and new energy vehicles. For full-year 2025, CPI was flat, missing the government’s around-2 percent target, while PPI declined 2.6 percent.
New Year holiday preparations spurred household spending on shopping and entertainment, lifting prices for communication devices, maternal products, durable goods, and appliances by 1.4 percent to 3 percent monthly. Government policies expanding domestic demand and boosting consumption showed clear effects, as noted by NBS statistician Dong Lijuan. Improved supply-demand dynamics aided certain industries, with unified national market efforts narrowing declines in related sectors. Rising international non-ferrous metal prices supported domestic mining and smelting, though falling global crude oil prices dragged petroleum sectors down 2.3 percent and 0.9 percent. Food price acceleration stemmed from vegetable and meat demand ahead of festivities.
Persistent deflationary pressures
Despite the CPI gain, full-year consumer prices stagnated, the lowest annual rate since 2009, reflecting weak demand. PPI contraction lasted over three years, eroding corporate profits and signaling unresolved excess capacity in manufacturing. Consumer durables prices fell faster than during the global financial crisis, per Capital Economics.
Factory-gate deflation persists due to feeble consumer demand, with economists like Sarah Tan at Moody’s Analytics warning of subdued inflation through 2026. Beijing’s stimulus has curbed some excess but not fully resolved manufacturing oversupply.
Authorities targeted around 2 percent CPI growth in 2025 via supply-demand balancing and reforms, but flat prices highlight shortfalls. Recent measures focus on consumption boosts and new quality productive forces, aiding price stabilization in emerging sectors. Efforts to regulate competition and improve production management supported PPI gains in key areas.
Broader 2025 challenges included soft demand amid post-pandemic recovery and global uncertainties. Holiday spending provided a temporary lift, but sustained stimulus is needed.
