China's Inflation Hits Two-Year High Amid Economic Challenges
Beijing, Wednesday, 10 December 2025.
In November 2025, China’s consumer inflation soared to a near two-year peak, intensifying concerns over economic stability and deflationary trends, urging economists to call for policy interventions.
Rising Consumer Prices Amidst Producer Deflation
In November 2025, China’s Consumer Price Index (CPI) rose to 0.7%, marking the highest increase in nearly two years. This surge in consumer prices is primarily attributed to rising food prices, which increased by 0.2% year-over-year, reversing a notable drop from the previous month. Conversely, energy prices experienced a more significant decline of 3.4% compared to the previous year, exacerbating the ongoing producer price deflation, which fell by 2.2% year-over-year [1].
Economic Stimulus and Policy Outlook
Amidst these inflationary pressures, economists have warned that China’s deflationary trends are likely to persist into the next year. This ongoing deflationary environment calls for renewed policy stimulus to bolster demand. Despite the easing bias maintained by policymakers, there seems to be a reluctance to implement broad-based stimulus measures at this time. The focus remains on stabilizing domestic demand and rebalancing supply, as emphasized during a recent Politburo meeting [1][5].
Impact on Global Markets and China’s Growth Targets
The inflation spike and persistent deflationary pressures in China have raised concerns about the stability of the world’s second-largest economy, potentially impacting global market dynamics. Nonetheless, China’s economic growth appears on track to meet the annual target of around 5% for 2025, supported by robust export activities, especially to non-U.S. markets [1][5].
Future Economic Strategies and Global Implications
As China navigates its post-pandemic recovery, the emphasis on expanding domestic demand and adjusting to a ‘fairly strong RMB policy’ in 2026 is expected. These strategies aim to counterbalance the challenges posed by the current economic environment, including the weak manufacturing demand and housing sector downturn. The global economic landscape could be influenced by these policy shifts, particularly as China seeks to stabilize its economic footing [1][5].