China's Inflation Rises in January Amid Lunar New Year Spending Surge

Consumer prices grew 0.5% year-on-year, the fastest pace in five months, but deflationary pressures and weak demand remain key concerns.

China's consumer price index (CPI) rose 0.5% in January 2025, driven by increased spending during the Lunar New Year holiday.
The rise in inflation exceeded analysts' expectations and marked the highest year-on-year growth since August 2024.
Food prices, particularly pork and fresh vegetables, saw significant increases, while tourism-related services also contributed to the uptick.
Despite the boost in consumer prices, China's producer price index (PPI) fell by 2.3%, continuing a 28-month streak of factory-gate deflation.
Analysts caution that the seasonal boost is unlikely to sustain, with broader deflationary pressures and sluggish domestic demand persisting as challenges for the Chinese economy.