China’s national consumer price index (CPI) declined into negative territory in February for the first time since January last year, dragged down by falling food, tobacco, and alcohol prices.
Year-on-Year and Monthly Decline
According to data released by China’s National Bureau of Statistics on Sunday, the CPI dropped by 0.7% year-over-year in February, reversing a 0.5% gain seen in January. The reading missed economists’ expectations of a 0.5% annualized contraction, as forecasted in a Reuters poll.
On a month-over-month basis, the CPI declined by 0.2%, compared to a 0.7% increase in January.
Economic Stimulus and Growth Targets
The decline in consumer prices comes as investors closely watch Beijing’s stimulus measures aimed at reviving economic growth. Last Wednesday, China set its GDP growth target for 2025 at “around 5%” and outlined plans to stabilize the economy by boosting domestic demand.
Additionally, Beijing revised down its annual consumer price inflation target to “around 2%” — the lowest level in more than two decades. This marks a shift from previous years where the target was set at 3% or higher, as noted by the Asia Society Policy Institute.
Analysts suggest that rather than a goal to be achieved, the new inflation target functions more as a ceiling.
Challenges to Growth
Despite government intervention, economists warn that China’s 5% growth target for 2025 may prove difficult to achieve, given persistent weak domestic consumption and rising trade tensions with the United States.
The ongoing trade dispute with U.S. President Donald Trump’s administration adds further uncertainty to China’s economic outlook, raising concerns over its ability to sustain momentum in the coming months.
