Economy Deflation worries in China: prices down significantly
For the first time in 13 months, consumer prices in China have fallen significantly and more sharply than expected. According to the statistics office in Beijing, the consumer price index fell by 0.7 percent in February compared to the same month last year.
09.03.2025, 05:04
SDA
Analysts had expected a fall of 0.4 percent. The news comes while the People's Congress - China's non-freely elected parliament - is meeting at the same time. The government declared there that it wanted to achieve inflation of around two percent by 2025, thus moving away from the otherwise set three percent target. Observers saw the decision as a step towards a more realistic target in the face of continuing deflation.
Statisticians see Spring Festival as a factor
The reason for the fall in consumer prices could be the higher basis for comparison a year earlier. Statisticians explained the development with the Spring Festival, which, unlike in 2024, fell at the end of January this year, meaning there were fewer days in February. During the festival, millions of people travel and consume a lot, which can cause prices to rise.
While Germany's statisticians recently recorded monthly inflation of more than two percent, deflation is weighing on the world's second-largest economy in China. Deflation is the opposite of inflation. It means that buyers get more for their money. However, economists consider such a development to be harmful in the long term, as companies earn less as a result, which can threaten wages and jobs.
China wants to stimulate consumption again
China's economy is also struggling with weak domestic demand and low consumer confidence. Beijing wants to encourage people to buy more again and announced billions in subsidies for a trade-in program for old appliances or vehicles at the People's Congress.
