China experiences negative consumer inflation for the first time in over a year

In February 2025, China's national consumer price index (CPI) showed a significant downturn, falling into negative territory for the first time in 13 months. The decline of 0.7% from the previous year was primarily driven by a drop in prices of food, tobacco, and alcohol. This figure represents a stark contrast to the previous month's year-on-year gain of 0.5% in January 2025. Additionally, on a month-to-month basis, the CPI also decreased by 0.2% in February, following a rise of 0.7% in January. The figures were below the expectations set by economists, who estimated an annualized contraction of 0.5%. This disappointing data comes at a critical time when investors are closely monitoring the efficacy of Beijing's stimulus measures aimed at revitalizing the fragile economic recovery in the country. On March 5, 2025, the Chinese government set a GDP growth target of around 5% for the year, while revising its annual inflation goals to around 2%, marking the lowest target in over twenty years. This new target appears to serve more as a ceiling rather than a goal for actual economic performance. Economists have expressed skepticism regarding the achievability of the growth target, citing persistently weak domestic consumption coupled with an ongoing trade dispute with the United States, particularly amidst tensions with the administration led by President Donald Trump. As the country grapples with these economic challenges, the government is working towards stabilizing economic growth by boosting domestic demand and addressing the challenges hindering the consumer market's recovery.