China’s consumer prices barely rose in November, inching up by only 0.2% from a year ago. That’s the weakest pace since June and suggests the economy still isn’t firing on all cylinders. Meanwhile, the producer price index (PPI) contracted yet again (now 26 months in a row) with a year-on-year decline of 2.5%
Recent subsidies on home appliances and cars did help boost retail sales. But will those effects last? The central bank will likely keep cutting interest rates and relax lending rules to support the economy. Some banks even predict the biggest rate cuts in a decade next year. Yet, it remains unclear if these measures can do more than keep the current soft patch from getting worse.
Food prices did ease a bit last month, with cheaper pork, vegetables, and fruit bringing relief to consumers. As did lower prices for gasoline.
On the industrial side, more real estate and infrastructure work saw steel, cement, and metal prices rise.
All in all, these trends suggest a faint undercurrent of improvement.
The numbers come right before top officials sit down this week to map out the next year’s policies. Many observers believe recent government moves have steadied nerves but have yet to spur real momentum. Some wonder if more direct action, such as bigger subsidies or deeper rate cuts, is what’s needed next to jolt the economy.
Officials aim to maintain a gross domestic product (GDP) expansion close to this year’s roughly 5% target. To get there, they may push harder to boost consumer spending and guard against any shocks from possible U.S. trade moves. Stronger local demand could offset weaker exports. But can they pull it off without hitting a wall of old problems like a shaky property market?
But, a big question remains: can confidence return fast enough to lift both consumers and businesses? The property sector remains fragile. October’s holiday season did boost retail spending, but it’s uncertain if that carried into November. Fresh data on retail, factory output, and investment will soon reveal if the economy has turned a corner or if it still needs a stronger push.