China’s consumer inflation quickens to 21-month high, producer deflation persists

BEIJING, Dec 10 (Reuters) – 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.

(Reporting by Qiaoyi Li, Yukun Zhang and Liz LeeEditing ⁠by Shri Navaratnam)