China CPI Inflation Rate: Data, Forecast & Trends

In April 2025, China's annual inflation rate, as measured by the Consumer Price Index (CPI), registered at -0.1% year-on-year (YoY). This marked the third consecutive month of consumer deflation, maintaining the same pace as March 2025 and matching market expectations. This figure stands in stark contrast to the inflationary trends observed in the US and Europe, highlighting a divergence in macroeconomic conditions and policy responses. The CPI for April stood at 103.20 points (with a base of 100 for 2020), indicating a slight overall price contraction compared to the previous year.

The Producer Price Index (PPI), which measures factory-gate prices, also continued its downward trend, falling by 2.7% YoY in April 2025. This was a further decline from the 2.7% drop in March and signifies persistent weakness in industrial demand and overcapacity in various sectors. The decline in PPI has implications for future CPI as it reduces cost-push pressures on consumer goods.

A detailed examination of the CPI components in April 2025 reveals the specific areas contributing to the overall disinflationary environment:

• Food, Tobacco, and Alcohol prices increased by a modest 0.3% YoY. Within this category, fresh fruits saw a notable increase of 5.2%, and pork prices rose by 5.0%. However, fresh vegetables declined by 5.0% and grain prices decreased by 1.4%, indicating mixed trends within the food basket. Food holds the largest weighting in China's CPI basket at 31.8%, so its subdued growth has a significant dampening effect on overall inflation.
• Housing prices saw a slight increase of 0.1% YoY. Residence holds a 17.2% weight in the CPI, yet its minimal growth further underscores the weak demand.
• Clothing prices rose by 1.3% YoY.
• Education, Culture, and Recreation experienced a 0.7% YoY increase, though touring costs specifically declined by 0.5%.
• Healthcare and Personal Articles rose by 0.2% YoY.
• Household Facilities, Articles, and Services increased by 0.2% YoY.
• In contrast, Transportation and Communication saw a significant decline of 3.9% YoY, largely driven by a 10.2% decrease in fuels for transport facilities and a 3.8% decline in transport facility prices. This substantial drop is a major contributor to the overall deflationary pressure.
• Miscellaneous Goods and Services surprisingly surged by 6.6% YoY, marking the highest increase among all categories.

The PPI breakdown showed a 3.1% decrease in producer prices for means of production and a 1.6% decrease for consumer goods. Prices for mining and quarrying dropped significantly by 9.4%, while raw materials fell by 3.6%, and the processing industry saw a 2.3% decline. These figures reflect an industrial sector struggling with oversupply and weak demand.

On a month-over-month (MoM) basis, China's CPI edged up by 0.1% in April 2025, reversing a 0.4% drop in March and marking the first monthly increase in three months. This small positive movement suggests a nascent stabilization but is far from indicating robust price growth.

Key contributors to the monthly increase were:

• Food, Tobacco, and Alcohol: Increased by 0.2% MoM, with fresh fruits up by 2.2% and aquatic products by 1.2%. Fresh vegetables, however, saw a decrease of 1.8%.
• Miscellaneous Goods and Services: Rose by a significant 2.4% MoM.
• Education, Culture, and Recreation: Increased by 0.4% MoM.
• Healthcare and Medical Services: Climbed by 0.2% MoM.

Conversely, Transportation and Telecommunication prices continued their monthly decline, dropping by 0.3%, and Clothing saw a minor decrease of 0.1%.

The PPI also registered a monthly decline of 0.4% in April 2025, primarily due to decreases in the mining and quarrying industry (-2.1%) and the raw materials industry (-1.0%).

China experienced remarkably low inflation in 2024, with its Consumer Price Index (CPI) rising by a mere 0.2% year-on-year. This average figure highlights a period of subdued price growth, contrasting sharply with higher inflation rates seen in many other major economies globally.

The low inflation environment was influenced by various factors, including persistent weak consumer demand and vast domestic manufacturing capacity. While some sectors experienced minor price increases, other areas, particularly food, saw declines, contributing to the near-flat overall CPI. The core CPI, which excludes volatile food and energy prices, also showed only a modest increase, underscoring the broad nature of the low inflationary pressures.

China's inflation history over the past three decades reveals a journey from periods of high inflation in the early 1990s to sustained low inflation and even deflationary episodes in recent years.

The early 1990s witnessed significant inflationary pressures, with the CPI peaking at an alarming 24.26% in 1994. This was largely a result of rapid economic reforms, liberalization of prices, and robust investment-driven growth. The government subsequently implemented austerity measures to curb inflation.

From the late 1990s through the early 2000s, inflation largely remained subdued, with several years of deflation. This period was characterized by significant overcapacity in traditional industries and the deflationary impact of China's entry into the World Trade Organization (WTO) in 2001, which intensified competition and production efficiency.

The mid-2000s saw a moderate increase in inflation, peaking at 5.93% in 2008, primarily driven by rising global commodity prices, particularly food and energy, which transmitted into the domestic economy. However, this was short-lived, with a return to deflation in 2009 (-0.73%) amidst the global financial crisis and a sharp contraction in external demand.

The 2010s generally saw inflation fluctuating within a manageable range, typically between 2% and 3%, reflecting a more mature and diversified economy..

More recently, China has entered a period of pronounced disinflation. In 2023, the annual inflation rate stood at just 0.23%. This trend has continued into 2024 and early 2025, with several months of negative CPI readings. This phenomenon is largely attributed to a combination of weak domestic demand, a downturn in the property sector, and intense price competition in key manufacturing sectors like electric vehicles.

The distinction between headline and core inflation is particularly insightful in China's current economic climate. Headline CPI, as discussed, includes volatile food and energy prices. China's National Bureau of Statistics (NBS) provides a core CPI that excludes food and energy.

In April 2025, while headline CPI was -0.1% YoY, core CPI rose by 0.5% YoY, holding steady for the second consecutive month. This divergence indicates that the disinflationary pressure is heavily concentrated in the food and energy sectors, especially the latter given global energy price fluctuations and domestic policies. The food component often experiences volatility due to supply-side factors like African Swine Fever impacting pork prices or weather affecting fresh produce. The significant decline in transportation costs has also contributed to the overall headline CPI weakness.

The core CPI, at 0.5%, suggests that underlying demand-pull inflationary pressures are extremely subdued, but not entirely absent. This indicates that general consumer demand for non-food, non-energy goods and services is expanding at a soft pace, a symptom of broader economic challenges such as weak consumer confidence and wealth effects from the property market downturn. Historically, core inflation in China has averaged around 1% since 2005.

The outlook for China's inflation is characterized by a complex interplay of domestic structural issues and global economic forces:

• Weak Domestic Demand: This is perhaps the most significant risk. A lack of robust consumer spending and investment due to factors like high household debt and cautious consumer sentiment continues to exert downward pressure on prices. The ongoing property market downturn has a significant negative wealth effect, dampening consumer confidence and willingness to spend. Unless consumer confidence significantly improves and propels a rebound in household consumption, disinflationary pressures are likely to persist.
• Property Sector Downturn: The protracted crisis in China's real estate sector is a major deflationary force. Falling property values reduce household wealth and dampen investment in construction and related industries, leading to job losses and reduced demand for goods and services. The current lack of a strong rebound in housing prices and continued weakness in property indicators suggest this will remain a drag on inflation for some time.
• Industrial Overcapacity and Intense Competition: Many of China's industrial sectors suffer from overcapacity. This leads to fierce price competition, especially in export markets, and translates into lower producer prices (as seen in the negative PPI). While beneficial for global consumers, this domestic oversupply actively suppresses inflationary pressures within China.
• Global Trade Tensions and Export Demand: Ongoing trade tensions, particularly with the US, and a weakening global demand outlook can impact China's export-oriented economy. Reduced export orders and increased protectionism can further exacerbate industrial overcapacity and push down prices for manufactured goods, thereby contributing to disinflation.
• Demographic Headwinds: China faces significant demographic challenges, including a shrinking working-age population and an aging society. These trends can lead to lower long-term consumption growth and savings, potentially contributing to a lower equilibrium inflation rate.
• Government Policy Response: The People's Bank of China (PBOC) and the Chinese government have implemented various monetary and fiscal measures to stimulate the economy. However, the effectiveness of these measures in boosting aggregate demand and tackling the structural issues remains to be seen. If stimulus is insufficient or poorly targeted, it may not generate enough demand-pull inflation to offset the current disinflationary forces.
• Commodity Price Volatility: While energy prices have declined, a resurgence in global commodity prices (e.g., oil, industrial metals) due to geopolitical events or renewed global growth could eventually transmit some inflationary pressures through import channels, even with subdued domestic demand. However, given the current overcapacity, the pass-through effect might be limited.

China Inflation Data