China’s deflation near-miss isn’t the economic story of 2025

South China Morning PostCenter-RightEN 2 min read 100% complete by Kun TianFebruary 1, 2026 at 09:30 AM

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medium article 2 min

China narrowly avoided deflation in the past year, with consumer prices remaining marginally positive despite economic headwinds. December data indicates a potential shift towards more balanced growth, as consumer prices rose 0.8% year-on-year, the fastest pace since early 2023. While full-year inflation was flat, core inflation stabilized, suggesting easing deflationary pressure. Food prices contributed to the uptick, and housing-related prices reflect property sector adjustments. Producer prices also show gradual improvement, with the pace of decline moderating. Overall, the data suggests China is operating in a low-inflation environment, reflecting cyclical weakness and structural change, but not trapped in deflation.

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china 100% deflation 90% inflation 80% economic growth 70% producer prices 60% consumer prices 60% economic transition 50% property sector 50% low-inflation environment 40%