China November CPI +0.2% y/y (anticipated +0.5%) PPI -2.5% y/y (anticipated -2.8%)

Consumer Price Index once again flirting with deflation.

• +0.2% y/y (slowest in 5 months) vs. +0.5% expected and down from +0.3% in October.
• the m/m is worse, +0.6% (expected -0.4%)

If there is something more positive it’s the PPI, that didn’t fall as sharply as expected or by as much in October. As noted, though, still its 26th month of deflation. For the m/m the PPI was +0.1%.

As I posted in the preview to this data earlier:

These figures highlight ongoing deflationary trends in China’s economy, characterized by:

• weak domestic demand
• and declining prices across various sectors.

Despite government stimulus efforts, including a substantial package aimed at alleviating local government debt burdens, consumer and producer prices continue to face downward pressure.

The prolonged deflationary environment poses challenges such as

• reduced corporate profits,
• potential wage stagnation,
• and increased real debt burdens,

which could further dampen economic growth. Analysts suggest that without significant policy interventions to boost domestic demand and consumer confidence, deflationary pressures may persist, potentially leading to a deflationary spira

In summary, the CPI and PPI data are expected to continue to reflect China’s ongoing struggle with deflation, underscoring the need for more robust measures to stimulate the economy and counteract these trends.