China's November consumer prices fall the fastest in 3 years
According to data from the National Bureau of Statistics (NBS), the consumer price index (CPI) fell 0.5% compared to the previous year and the previous month. These declines were more significant than the projected 0.1% drops in a Reuters poll. This drop in the CPI was the most severe since November 2020.
Core inflation, which excludes food and fuel prices, remained at 0.6% compared to October, suggesting the challenging task faced by Chinese authorities to stimulate demand in the presence of deflationary forces.
Although consumer prices in China have been hovering on the brink of deflation recently, the central bank governor, Pan Gongsheng, stated that inflation is anticipated to increase.
The producer price index (PPI), on the other hand, fell by 3.0% compared to the same period last year, surpassing the 2.6% drop in October. This marks the 14th consecutive month of decline and the most rapid decline since August. Economists had predicted a 2.8% fall in November.
Calls for additional policy support to bolster growth have persisted due to mixed trade data and manufacturing surveys.
Various challenges have impacted China’s economy this year, including mounting local government debt, a struggling housing market, and weak demand at home and abroad. Consumers have become more cautious about spending due to uncertainties surrounding the elusive economic recovery.
Moody’s recently issued a warning about China’s credit rating, citing the costs of supporting local governments and state-owned enterprises, as well as controlling the property crisis, as burdens on the economy. China’s finance ministry called this decision “disappointing” and expressed confidence in the economy’s rebound with manageable risks.
According to state media, the Politburo, a top decision-making body of the ruling Communist Party, has stated its intention to stimulate domestic demand and bolster economic recovery in 2024.