• China's consumer prices rose 0.8% in December, the highest since 2023.
• Annual inflation remained flat for 2025, indicating ongoing deflationary pressures.
• Food prices significantly drove the consumer price index (CPI) increase.
• Producer price index (PPI) continues its deflationary trend, falling 1.9% year-on-year.
• Policymakers are expected to implement additional stimulus measures in 2026.

In December 2025, China's consumer prices experienced an increase of 0.8%, marking the highest rate of inflation since March 2023. This was largely attributed to rising food prices, particularly "fresh vegetables and beef," which saw increases of 18.2% and 6.9%, respectively, according to Dong Lijuan, a spokesperson for the National Bureau of Statistics (NBS) Reuters, South China Morning Post, Channel News Asia, and India Times.

Despite the monthly gains, the overall CPI for the year remained unchanged, indicating a year of flat inflation, which is the lowest since 2009. This performance fell significantly short of the Chinese government's target of around 2%, highlighting ongoing struggles to stimulate consumer demand in the world's second-largest economy, as observed by multiple analysts South China Morning Post and Channel News Asia.

The producer price index (PPI), which measures the prices manufacturers receive for their goods, continued to show signs of deflation, dropping 1.9% year-on-year in December 2025. This marks the 39th consecutive month of decline, suggesting ongoing challenges stemming from weak demand and an oversupply of goods within the manufacturing sector Reuters and Channel News Asia.

Policy experts, including Zichun Huang from Capital Economics, noted that while recent price increases may have been influenced by seasonal factors, the underlying demand for consumer goods remains weak. Thus, ongoing deflationary pressures are likely to persist unless more robust demand-side measures are introduced South China Morning Post, India Times, and Channel News Asia.

As the Chinese government prepares for 2026, it has committed to enhancing support for domestic consumption and implementing further stimulus measures to combat these deflationary pressures. Such actions are critical in attempting to stabilize household demand and encourage sustainable economic growth Reuters, South China Morning Post, and India Times.