China’s deflation fight drags on, amplifying calls for monetary easing

National Bureau of Statistics says consumer price index fell 0.3 per cent last month, with factory-gate prices down 2.3 per cent

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A woman shops at a supermarket in Zaozhuang, Shandong province, on September 10. Photo: Xinhua

Published: 10:14am, 15 Oct 2025Updated: 12:11pm, 15 Oct 2025

China’s consumer prices fell again in September as demand remained weak, while a slight narrowing of the fall in factory-gate prices gave a hint that Beijing’s efforts to curb involution – the cutthroat intra-industry competition pushing down prices in several sectors – could be making ground, even as economists said further monetary easing remained an option.

The national consumer price index (CPI), a key gauge of inflation, fell 0.3 per cent year on year last month, according to data released by the National Bureau of Statistics on Wednesday.

The fall was bigger than the market had expected, with a poll by financial provider Wind having forecast a 0.15 per cent drop. In August, the CPI fell 0.4 per cent year on year.

China is grappling with persistent deflationary pressures, driven by the dual challenges of sluggish domestic demand and oversupply, with trade uncertainty hindering suppliers’ efforts to clear excess inventory.

“The year-on-year decline was primarily due to a tail effect,” said Dong Lijuan, a senior statistician at the bureau, referring to a higher base last year.

Lower food and energy prices were the main factors contributing to the decline, she added.

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