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E-mail China.org.cn, February 25, 2025
Market News International:
China's CPI rose 0.2% in 2024, according to newly released data. We also noticed that December's core CPI rose slightly to 0.4%, the highest level in five months. How does the NBS view last year's inflation performance? What's your outlook for inflation in 2025, and what measures will be taken to ensure inflation meets official targets? Thank you.
Kang Yi:
These questions are about prices. Let's invite Mr. Fu to answer.
Fu Linghui:
Thank you for your questions. Pricing is indeed an issue that draws widespread attention. In 2024, the CPI showed a slight upward trend, rising 0.2% for the year, matching the growth rate of 2023. From a monthly perspective, the CPI showed slight year-on-year increases in all months except January, which saw a slight decline. When analyzing the CPI trend, it is important to examine overall data, structural changes and dynamic trends.
First, the overall CPI trend in 2024 showed structural characteristics. In 2024, CPI growth was significantly influenced by falling food and energy prices, while core CPI - excluding food and energy — remained generally stable. From a food price perspective, some regions experienced severe disruptions from extreme weather last year. However, the overall supply of foods — including grains, oils, meat, eggs and vegetables — remained sufficient, with prices staying stable and showing slight declines. In 2024, food prices decreased by 0.6% year on year, contributing to a 0.11 percentage point drop in the CPI. Edible oil, beef, mutton, eggs and fresh fruit saw price decreases ranging from 3.5% to 11.6%. In terms of energy prices, weak global economic growth last year drove international commodity prices lower, particularly crude oil, despite monthly fluctuations. This led to declining domestic energy prices. China's CPI energy component decreased 0.1% in 2024 year on year, as gasoline prices fell 0.7% and diesel 0.8%. Core CPI, a better indicator of the supply-demand relationship, stayed stable with a 0.5% year-on-year rise in 2024, while service prices grew 0.7%. Notably, starting in the fourth quarter, driven by the rebound in consumer demand, the year-on-year growth rate of core CPI has been rising month after month, experiencing small but continuous increases for three months.
Second, there's a growing number of factors that could lead to moderate CPI increases. With the synergistic effect of existing policies and a package of incremental policies, the momentum of economic recovery is strengthening, the recovery of consumer demand is accelerating, and favorable factors for a moderate price rebound are increasing. In the near term, food consumption demand is rising ahead of the Spring Festival holiday. Service consumption — including dining out, family visits and travel — is also increasing, contributing to an expected seasonal rise in the CPI. Based on preliminary January data, prices have risen steadily for vegetables, fresh fruit, airline tickets, tourism and other goods and services. The CPI is expected to show a larger year-on-year increase in January. At the same time, rising business and consumer confidence is providing additional support for a moderate increase in the CPI. In December, the expectation index for manufacturing production and business activities was 53.3%, and the business expectation index for the service sector was 57.6%. Both figures were above the threshold. The consumer confidence index rose 0.2 percentage point compared to the previous month.
The Central Economic Work Conference identified vigorously boosting consumption, improving investment efficiency, and comprehensively expanding domestic demand as the top priorities for economic work in 2025. It also, for the first time, established maintaining stable growth, stable employment and reasonable price rebounds as essential goals. With the intensified implementation of macro policies, it is expected to create a better policy support for economic growth and a reasonable rise in prices. Consequently, the CPI is expected to see a moderate rebound in 2025.
Thank you.
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