Consumer prices fell in China in February and remain flat in a sluggish
economy
[March 10, 2025] BEIJING
(AP) — Consumer prices fell in China in February for the first time in
13 months, as persistent weak demand was compounded by the early timing
of the Lunar New Year holiday.
The National Bureau of Statistics said Sunday that the consumer price
index dropped 0.7% in February compared with a year ago. On a monthly
basis, prices were down 0.2% from January.
While many other countries wrestle with inflation, China's policymakers
face flat to falling prices, and the possibility they could evolve into
a deflationary spiral that would drag down the economy. The government
stressed the need to increase domestic demand and consumer spending in
an annual report last week to its ceremonial legislature, the National
People's Congress, but held back on unveiling any dramatic new steps to
boost the economy.
The Lunar New Year, a time when spending rises for travel, dining out
and entertainment, came in late January this year instead of February,
as it's based on the cycles of the moon. Holiday spending helped drive
the consumer price index up 0.5% in January, but it then fell last month
compared with 2024's elevated level.
Factoring out the impact of the holiday, the index rose 0.1% last month,
Dong Lijuan, a statistician at the government's statistics bureau, said
in a written analysis.
That is still far lower than ideal. Last week's government annual report
included an inflation target of 2% for this year, but it is likely to
fall far short of that goal. The consumer price index was flat in 2024,
rising 0.2%.
Besides the early Lunar New Year, two other factors contributed to
falling prices in February, Dong said: Better weather boosted farm
production, driving down the price of fresh vegetables and automakers
also stepped up promotions to try to boost sales, reducing prices for
new cars.
The producer price index, which measures the wholesale price of goods,
fell 2.2% in February, the statistics bureau said. Producer prices have
been falling more sharply than consumer prices, putting pressure on
companies to cut labor and other costs.
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Shoppers walk at a tourist attraction area, Nanluogu Alley in the
evening in downtown Beijing, China, Saturday, March 8, 2025. (AP
Photo/Vincent Thian)
 The falling prices are a symptom of
both weak consumer spending and a massive expansion of factories to
build electric vehicles, solar panels and other green-energy
products, encouraged by government subsidies.
A burgeoning trade war with the United States could add to China’s
economic challenges, which include a prolonged real estate market
crisis that is weighing on consumer confidence.
Government ministers, speaking to journalists at the National
People's Congress on Sunday, pledged continued efforts to stabilize
the real estate market and said that expanding employment in the
current economic environment would be “a heavy task.”
The employment situation is showing signs of improvement but the
foundation for economic recovery remains unstable, said Wang
Xiaoping, the minister of human resources and social security.
“The pressure on total employment remains unchanged,” she said,
noting that people are facing difficulties finding work and raising
their incomes.
For real estate, a portion of this year's 4.4 trillion yuan ($600
billion) in special local government bonds would go toward
purchasing completed but unsold housing projects and converting them
to affordable housing, apartments for young people, staff
dormitories and other uses, said Ni Hong, the minister of housing
and urban-rural development.
The government will also expand a program to rehabilitate older
housing including adding all compounds built before 2000 to its
urban renovation scheme, he said.
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