China Producer Deflation Hits 16-Month Low

China’s producer prices fell 0.9% year-on-year in February 2026, easing from a 1.4% decline in January and better than market expectations of a 1.1% drop. It marked the mildest decline since July 2024, buoyed by stronger prices in advanced and emerging sectors and by capacity management in key industries. Chinese Premier Li Qiang said that Beijing’s aim for “an appropriate rebound” in prices is one of the key considerations for monetary policy. Prices for production materials fell at a slower pace (-0.7% vs -1.3% in January), with deflation easing for raw materials (-1.9% vs -2%) and intermediate goods (-5.3% vs -8.1%), while prices recovered for processed goods (0.3% vs -0.4%). Consumer goods prices also declined more gradually (-1.6% vs -1.7%), particularly for clothing (-1.0% vs -0.7%), food (-1.8% vs -1.9%), and durable goods (-1.6% vs -1.8%), while deflation for daily-use items remained steady at 1.8%. On a monthly basis, producer prices stood at 0.4%, unchanged from January.

China’s producer prices dropped 1.4% year-on-year in January 2026, slowing from a 1.9% fall in December and extending the contraction to a 40th consecutive month. The latest reading was slightly below market expectations of a 1.5% fall, marking the mildest decline since July 2024, reflecting Beijing’s continued efforts to rein in excessive price competition. Production material prices fell much more slowly (-1.3% vs -2.1% in December 2025), with decreases softening in raw materials (-2.0% vs -2.6%) and processing (-0.4% vs -1.6%), while mining dropped at a faster pace (-8.1% vs -4.7%). Consumer goods prices declined at a faster pace (-1.7% vs -1.3%), driven by steeper falls in clothing (-0.7% vs -0.1%) and food prices (-1.9% vs -1.5%), while durable goods remained weak (-1.8% vs -3.5%). Also, the costs of daily-use goods fell faster (-1.8% vs 1.4%). Monthly, the PPI rose 0.4% in January, accelerating from a 0.2% rise in December, marking the fastest increase since September 2023.

China’s producer prices fell 1.9% year-on-year in December 2025, easing from a 2.2% decline in November and extending the contraction to a 39th consecutive month. The latest reading was slightly above market expectations of a 2.0% drop, marking the mildest decline since August 2024, reflecting Beijing’s continued efforts to rein in excessive price competition. Consumer goods prices dropped a bit slower (-1.3% vs -1.5% in November), driven by milder falls in durable goods (-3.5% vs -3.6%) and clothing (-0.1% vs -0.3%), while food prices remained weak (-1.5% vs -1.5%). In contrast, costs of daily-use goods rose slightly faster (1.4% vs 1.1%). At the same time, production material prices fell more slowly (-2.1% vs -2.4%), with decreases softening in mining (-4.7% vs -6.1%), raw materials (-2.6% vs -2.9%), and processing (-1.6% vs -1.9%). For the full year of 2025, producer prices shrank 2.6%. Monthly, the PPI rose 0.2% in December, after edging up 0.1% in the previous two months.