On November 6, 2025, the consumer inflation rate in China rose by 1.3% year-on-year, the largest increase in over three years, attributed to enhanced spending during long holidays and a decrease in factory price deflation. This surpassed economists’ expectations of a 0.8% rise. The consumer price index (CPI) saw a monthly rise of 1%, along with a core CPI growth of 1.8%, the highest since March 2019. Service prices rose significantly, fueled by demand in sectors related to holiday travel and entertainment.
China’s producer price index fell by 0.9%, a smaller decline than anticipated, marking the slowest deflation pace in over a year due to rising prices for metals and primary goods. The government’s annual inflation target for 2026 remains around 2%, the lowest in over two decades, aiming to boost domestic demand amid ongoing price competition.
In response to weak domestic consumption, authorities have allocated funds for consumer trade-in subsidies and private investment support. Experts note that while exports could drive growth, continued weak domestic consumption poses a structural challenge, and future fiscal measures may depend on export performance. Chinese inflation in February included notable increases in gold and gasoline prices, driven by escalating geopolitical tensions. These factors suggest potential risks for stagflation if Middle Eastern conflicts persist.
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