NextFin news, China's economy showed signs of cooling this August as consumer prices fell into deflation, with the National Bureau of Statistics reporting a 0.4% year-on-year decline in the consumer price index (CPI) in August 2025. This data was released on Wednesday, September 10, 2025, in Beijing, China.
The drop in consumer prices was larger than economists' forecasts, which had predicted a 0.2% contraction. The decline in CPI marks a return to deflationary territory for China, highlighting ongoing challenges in domestic demand and economic growth.
Meanwhile, the producer price index (PPI), which measures wholesale prices, fell 2.9% year-on-year in August, consistent with economists' estimates. The PPI remained flat on a month-on-month basis, indicating persistent deflationary pressures at the factory gate level.
Core CPI, which excludes volatile food and energy prices, rose 0.9% year-on-year, the highest increase since February 2024. Notable price gains were observed in household appliances (up 4.6%) and clothing (up 1.9%).
Chinese authorities attributed the headline CPI decline largely to a high base effect from the previous year and lower food prices. Efforts by Beijing to regulate prices and stabilize the economy have contributed to a narrower decline in producer prices.
The deflationary trend reflects weakening domestic demand and slowing export growth, prompting calls for the Chinese government to implement stronger stimulus measures to support the economy.
These developments come amid broader concerns about Asia's economic outlook, with deflationary pressures also affecting other regional economies.
Sources: National Bureau of Statistics of China; CNBC (2025-09-10); Bloomberg (2025-09-10); Financial Times (2025-09-10).
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