People fill the popular shopping area in Nanjing East Road, Shanghai — Bloomberg
BEIJING: China's annual consumer inflation accelerated to a 21-month peak in November, mainly driven by food prices, while factory-gate deflation deepened, with underlying trends suggesting domestic demand remains weak and unlikely to recover in the near term.
The consumer price index (CPI) rose 0.7% from a year earlier, National Bureau of Statistics data showed, matching a 0.7% expansion in a Reuters poll of economists. It had increased 0.2% in October.
The pickup in consumer inflation was mainly driven by rising food prices, which increased 0.2% year-on-year after dropping 2.9% in October.
But annual core inflation, which excludes volatile prices of food and fuel, was unchanged at 1.2% last month. On a monthly basis, CPI dipped 0.1% versus a 0.2% rise in October and a forecast gain of 0.2%.
Factory-gate deflation has also persisted in China for three years, even as the government has stepped up a campaign to curb industrial overcapacity and made calls on key sectors to scale back cut-throat competition. The latest data showed few signs of a recovery in the deflationary impulse.
The producer prices index (PPI) fell 2.2% year-on-year in November, compared with a 2.1% fall in October and worse than the forecast for a 2.0% drop. The index was up 0.1% from October.
The $19 trillion Chinese economy, buoyed by policy support and resilient goods exports, is on course to meet Beijing's growth target of "around 5%" for the year. However, in order to foster sustainable longer term growth, analysts say the government needs to stabilise the faltering property sector, lower the youth unemployment rate and build a better social safety net to encourage spending.
The country's top leaders have pledged to better balance supply and demand and signalled a shift toward supporting household consumption and restructuring the economy over the next five years.
The Politburo, a top decision-making body of the ruling Communist Party, vowed on Monday to keep expanding domestic demand and support the broader economy with more proactive policies in 2026. - Reuters
