China Consumer Prices Drop More Than Expected in September, Remaining in Deflation

Beijing — China’s consumer prices fell more than expected in September, showing continued weakness in domestic demand as the economy struggles with trade tensions and a property slowdown.

According to data from the National Bureau of Statistics (NBS), the consumer price index (CPI) declined 0.3% year-on-year, sharper than the 0.2% drop economists had expected. The fall followed a 0.4% decline in August, indicating that deflationary pressure remains persistent.

On a month-to-month basis, prices rose only 0.1%, suggesting a limited recovery in consumer spending. However, core CPI, which excludes volatile food and energy prices, increased 1% from a year earlier, marking its highest level since February 2024.

Meanwhile, China’s producer price index (PPI), which measures factory-gate prices, fell 2.3% year-on-year, slightly improving from a 2.9% drop in August and a 3.6% fall in July. The continued decline in producer prices shows the ongoing challenges for manufacturers, who face weak demand and pressure from U.S. trade policies.

Economists said the deflation highlights China’s broader economic difficulties, including low consumer confidence, overcapacity, and intense price competition across industries.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said it is “too early to conclude that the deflationary pressure is fading,” noting that trade tensions and uncertainty over global growth continue to weigh on sentiment.

The NBS attributed the lower CPI partly to a “tail effect” from last year’s higher price base, adding that without this factor, consumer prices would have risen 0.5%.

Food and energy prices were the main contributors to the decline, falling 4.4% and 2.7%, respectively. Meanwhile, prices for gold and platinum jewelry surged by 42.1% and 33.6%, driven by strong global demand.

The government has taken steps to address the slowdown, including limiting overcapacity and curbing price wars in sectors such as metals and energy. These efforts helped industrial profits rise 20.4% in August, breaking a three-month decline.

Still, analysts warn that demand recovery remains uncertain, with weak housing and job markets likely to keep inflation low in the near term.