China's Consumer Prices Fall into Deflation for First Time in Over a Year

February CPI data shows a 0.7% year-on-year decline, reflecting weak domestic demand and economic challenges.

China's Consumer Price Index (CPI) dropped 0.7% in February compared to the previous year, marking the first deflationary reading since January 2024.
The decline was sharper than the 0.5% contraction forecast by economists and reversed a 0.5% increase recorded in January.
Seasonal factors, including the timing of the Lunar New Year, and falling food, tobacco, and alcohol prices contributed to the drop.
Chinese officials have set a 2025 GDP growth target of around 5% and an inflation ceiling of 2%, but weak domestic consumption and trade tensions with the U.S. pose significant hurdles.
The producer price index also showed deflation, with a 2.2% year-on-year decrease in February, highlighting broader economic pressures.