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Consumer prices decline in China

China saw its largest drop in consumer prices in over 14 years in January, along with a decline in producer prices, increasing pressure on policymakers to stimulate the struggling economy. The Consumer Price Index fell by 0.8 percent year on year, driven by a significant decrease in food prices, while economists had expected a 0.5 percent decline. Despite meeting the official growth target of around 5 percent in 2023, China's recovery remains shaky, prompting expectations for a similar growth target this year. The central bank’s recent announcement of a significant cut to bank reserves aimed to support the economy, but analysts stress the need for additional measures to boost confidence and demand. Factory gate prices also continued to decline, posing challenges for manufacturers, especially smaller exporters.

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