Overview

• China's Consumer Price Index (CPI) fell 0.7% year-on-year in February, reversing January's 0.5% increase and marking the sharpest drop in over a year.
• Core CPI, which excludes volatile items like food and energy, declined 0.1%, the first contraction since 2021, reflecting persistently weak domestic demand.
• The Producer Price Index (PPI), tracking wholesale prices, fell 2.2% in February, marking the 29th consecutive month of contraction in factory-gate prices.
• Economic challenges are compounded by an escalating trade war with the U.S. and a prolonged downturn in China's property sector, further straining growth prospects.
• Beijing has set a 5% GDP growth target for 2025 and lowered its inflation target to 2%, but analysts warn that without stronger fiscal and monetary stimulus, deflationary pressures may persist.