China's annual consumer price inflation rises to 34-month peak

China's annual consumer price inflation accelerated to a 34-month high in December, but the full-year rate slumped to the lowest in 16 years while producer deflation persisted, backing market expectations for more stimulus to shore up soft demand.

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Imbalances in the $19 trillion economy have worsened over the past year even as growth is on course to meet Beijing's target of “around 5%” for 2025, buoyed by policy support and resilient goods exports.

US President Donald Trump's global trade war has added to persistently soft consumer demand, which has remained a drag on confidence and growth for years amid a prolonged property crisis.

The December consumer price index (CPI) rose 0.8% from the same month in 2024, National Bureau of Statistics (NBS) data showed on Friday, matching expectations in a Reuters poll and perking up from the 0.7% increase in November.

The rise was mainly driven by food prices, especially those of fresh vegetables and beef, which expanded 18.2% and 6.9% respectively, Dong Lijuan, a statistician at NBS, said in a statement. Pre-New Year holiday shopping and supportive policies also helped boost consumer prices, Dong added.

Chinese policymakers have repeatedly pledged to support a rebound in prices with monetary policy and have cracked down on excessive competition. They have also vowed to boost people's income to unleash consumption potential and better align the country’s supply and demand.

Yet, the underlying demand impulse in the economy remains weak.