China consumer prices rise at fastest pace since February 2023

China's producer price deflation eased in December as consumer price inflation accelerated, official data showed Friday.

According to the National Bureau of Statistics of China, the producer price index eased to minus 1.9% year-on-year in December from minus 2.2% in November, missing the FXStreet-cited consensus forecast of minus 2%.

"This level marked a 16-month high and the 39th consecutive month of PPI deflation," commented Lynn Song, ING chief economist, Greater China.

Additionally, the NBS said consumer price index inflation accelerated to 0.8% on-year in December from 0.7% in November, the highest level recorded since February 2023, though below the consensus forecast of 0.9%.

This increase can be attributed largely to rising food prices, with food inflation rising to a 14-month high of 1.1% in December on-year from 0.2% in the previous month.

Meanwhile, CPI inflation edged up 0.2% month-on-month in December from minus 0.1% in the November.

With the full-year CPI at 0.0%, the ING economist said China avoided deflation in 2025, noting that inflation showed signs of bottoming out and should pick up in 2026.

ING's Song said: "We're looking for 0.9% CPI inflation in 2026. While this remains well short of the 2% inflation target pursued by many central banks globally, it would nonetheless be a healthy development after three consecutive years of annual CPI inflation of 0.2% or lower.

"Despite expectations of a recovery, inflation remains relatively low and should not preclude further monetary easing this year. We continue to expect there's a case for further rate cuts this year, with a 10 [basis point] cut sometime in 1H26."