China’s deflation accelerates: prices fall to their lowest in months. Is this the result of the food price collapse?

10 September 20259 months babelfish

The deflationary pressure on consumer prices in China continues to intensify. Consumer prices in China fell 0.4% year-on-year in August 2025, after remaining unchanged the previous month and disappointing market expectations of a 0.2% decline.

This was the fifth consumer price deflation this year and the sharpest drop since February. Food prices plummeted (-4.3% compared to -1.6% in July), recording the sharpest decline in almost four years, with declines across all categories and the sharpest decline in pork prices due to ample supply, lower production costs, and weak demand. It's possible that the introduction of tariffs on EU pork is also due to the country's abundance of this food .

In contrast, non-food inflation accelerated (0.5% vs. 0.3%), supported by Beijing's continued subsidies on consumer goods, with increases in the construction (0.1% vs. 0.1%), clothing (1.8% vs. 1.7%), healthcare (0.9% vs. 0.5%) and education (1.0% vs. 0.9%) sectors.

Meanwhile, transportation costs decreased, but at a slower pace (-2.4% versus -3.1%).

Here is the annual inflation chart:

Core inflation, which excludes food and energy, rose 0.9% year-over-year, the highest level in 18 months, following a 0.8% increase in July. On a monthly basis, CPI remained unchanged, below the forecast of 0.1%, after rising 0.4% in July.

Prices are therefore falling, but mostly due to seasonal factors related to food. At least it's clear that government stimulus has succeeded in stemming inflation in non-food items, while core inflation is showing some wage growth. The Chinese economy continues to struggle with domestic demand, but the government is working to contain it.

The article China, deflation accelerates: prices fall to their lowest in months. Is it the effect of the food collapse? comes from Economic Scenarios .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-la-deflazione-accelera-prezzi-in-calo-ai-minimi-da-mesi-e-leffetto-del-crollo-degli-alimentari/ on Wed, 10 Sep 2025 09:00:41 +0000.