China’s Consumer Prices Stagnate in 2024 Amid Weak Demand
BEIJING: China’s consumer prices remained stagnant in 2024, reflecting feeble domestic demand, while factory-gate prices extended their deflationary streak into a second consecutive year, according to official data from the National Bureau of Statistics.
Key Economic Indicators
- Consumer Price Index (CPI):
The annual CPI rose by just 0.2%, consistent with 2023’s figures, falling far short of the government’s 3% target. December’s CPI edged up by 0.1% year-on-year, the lowest since April, in line with analysts’ predictions. - Core Inflation:
Excluding volatile food and energy prices, core inflation rose to 0.4% in December, the highest in five months, reflecting slight upward pressure on demand. - Producer Price Index (PPI):
December’s PPI declined by 2.3%, marking 27 consecutive months of deflation, though showing a slower rate of decline than November’s 2.5%.
Economic and Policy Context
Consumer demand has been weakened by job insecurity, a persistent property downturn, rising debt, and trade uncertainty as the incoming U.S. administration of President-elect Donald Trump revives tariff-related tensions. Despite Beijing’s aggressive stimulus measures, including a record $411 billion in special treasury bond issuances and expanded fiscal spending, deflationary pressures persist.
Sectoral and Consumer Trends
- A third-year electric vehicle price war and broader retail sector discounting are dampening profit margins.
- Consumers increasingly opt to rent rather than buy discretionary items, reflecting cautious spending behavior.
Expert Analysis
Julian Evans-Pritchard, Head of China Economics, noted that policy stimulus is temporarily buoying prices but expects underlying inflation to weaken later in the year. Zhang Zhiwei of Pinpoint Asset Management emphasized the unresolved property sector downturn as a major drag on consumer sentiment and inflation.
Outlook
China’s inflation trajectory will depend heavily on the success of fiscal policies aimed at restoring confidence. The government has allocated $41 billion to subsidize consumer goods trade-ins and equipment upgrades and is poised to increase funding from ultra-long treasury bonds in 2025 to stimulate investment and consumption.
Conclusion
While short-term stimulus has provided limited relief, persistent structural challenges continue to cloud China’s inflation outlook, with domestic demand and property sector recovery remaining pivotal to future economic stability.
