Growth in China's consumer prices slowed last month and missed forecasts, official data showed today, as leaders unveiled a batch of measures to boost sluggish spending during the upcoming Lunar New Year holiday.
The world's second biggest economy has been hamstrung by lacklustre domestic consumption since the end of the Covid-19 pandemic, presenting a major hurdle to government growth targets.
But this year's nine-day public holiday - the longest in history - starts on Sunday and has been touted by officials as a chance to kickstart activity.
In the latest blow to efforts to revive economic activity, figures from the National Bureau of Statistics (NBS) today showed the consumer price index, a key measure of inflation, slowed to 0.2% year-on-year in January.
That was well down from December's 0.8%, which was the quickest in almost three years, and short of the 0.4% rise forecast in a Bloomberg survey.
China's vast economy has stagnated in recent years, despite a historic boom in exports.
Authorities have adopted measures to boost consumption, including a subsidy scheme for household goods, but results have been muted.
Consumer inflation is "likely to bounce back in February", wrote Zichun Huang of Capital Economics. But she added that "with the imbalances between supply and demand set to persist, we doubt China's deflationary pressures will fade any time soon".
Officials vowed at a news conference in Beijing today to enact further measures to encourage domestic spending.
Local authorities across China have allocated 2.05 billion yuan ($297 million) to "directly benefit consumers" during the upcoming holiday, said Vice Minister of Commerce Sheng Qiuping.
The "New Year's gifts" will be distributed through vouchers, subsidies and traditional red envelopes containing money, state broadcaster CCTV said.
Other data released today suggested a recent easing of persistent deflation in the manufacturing sector.
Prices at the factory gate - stuck in negative territory since October 2022 - fell at a slower rate last month, NBS data showed.
The producer price index's 1.4% year-on-year decrease was the slowest pace of deflation since July 2024. It was also slightly better than the 1.5% decrease forecast in the Bloomberg survey.
Improvements were "concentrated in non-ferrous metals, likely reflecting recent volatility in global commodity markets," wrote Huang.
PPI expanded 0.4 percent month-on-month.
That growth "suggests the deflationary pressure in the manufacturing sector may have become less severe", wrote Zhang Zhiwei, president and chief economist of Pinpoint Asset Management.
Official data released last month showed China's economy grew 5% in 2025, meeting the government's target but among the slowest rates in decades.
Experts expect leaders to announce the same or a slightly lower goal for this year at a key political gathering in early March.
