A figurine of Chinese President Xi Jinping on display at a store in Beijing, China, 09 December 2023. China`s consumer prices dropped 0.5 percent in November 2023 versus last year making it the steepest decline in consumer prices since November 2020, according to data released by the National Bureau of Statistics of China. EPA/MARK R. CRISTINO
While many central banks around the world are trying to reduce inflation, China is struggling to lower prices this year, reports CNN.
The consumer price index (CPI) fell 0.5% in November from a year earlier, the biggest fall since November 2020, data published by the Office for National Statistics showed. It was worse than expected, as analysts polled by Reuters had forecast a 0.1% decline.
The decline also marked an acceleration from October, when the consumer price index fell 0.2% from a year earlier, and prompted calls for urgent action by Beijing to boost demand and prevent a downward spiral in prices.
The data comes days after policymakers vowed to boost fiscal and monetary support to boost the faltering economy.
For most of this year, China has struggled with weak prices due to a slump in the real estate market and lower consumer confidence.
Consumer inflation has slowed since February and fell into negative territory in July for the first time in more than two years. It returned to positive territory in August and was unchanged in September, but fell below zero again in October.
"China's deflationary situation is deepening under the triple whammy of domestic food prices, international oil price adjustments and weak domestic demand," Citi analysts said in a report.
"Signs of price weakness are already spreading from goods to services," they added.
Food prices were a major driver of the decline in the consumer price index, falling 4.2% in November from a year earlier. In particular, pork prices fell by 31.8%.
Gasoline prices fell after international oil prices hit their lowest level in months in November.
Inflation in services also slowed. Last month, it rose 1% from a year earlier, compared with a 1.2% increase in October.
The producer price index (PPI), which is determined mainly by the prices of raw materials and materials, fell 3% in November, the 14th consecutive month of decline.
Rising deflationary pressures cast further doubt on China's economic recovery.
"There is no time for policy vacillation to prevent a vicious circle between deflation, confidence and activity," the analysts said.
Late last month, People's Bank of China Governor Pan Gongsheng said in Hong Kong that China would keep its monetary policy "stimulative" to support the economy and expected consumer prices to rise in the coming months.
China's top officials gathered at a Politburo meeting and pledged to do more to expand domestic demand and boost consumer spending.
The Politburo meeting, along with the annual Central Economic Work Conference (CEC) expected later this month, usually sets the tone for economic policy for the coming year.
Investors are awaiting more details on economic policy next year, Citi analysts said, adding that they expect "imminent" cuts in reserve requirements and key interest rates. /BGNES
