C hina’s consumer inflation rate slowed in September, official data showed Sunday, in a sign that demand remains fragile in the world’s number two economy. The slowdown comes as authorities have been seeking to boost domestic activity and shore up China’s ailing property sector, with officials on Saturday announcing plans for a significant fiscal stimulus package. The consumer price index (CPI), a key measure of inflation, rose 0.4 percent year-on-year in September, down from the 0.6 percent recorded in August, the National Bureau of Statistics (NBS) said. The figure came in below the 0.6 percent forecast in a Bloomberg survey of economists. August’s figure, the highest level since February, had raised hopes that consumer confidence may be picking up. While many major Western economies have been grappling with the threat of high inflation, China has instead been battling low or negative prices.
At the end of 2023, the country sank into deflation for four months, with the sharpest contraction in consumer prices in 14 years in January. The NBS also announced Sunday that factory-gate prices slid 2.8 percent year-on-year, extending a deflationary run that has lasted since late 2022. The figure was down from the 1.8 percent decline recorded in August. In recent weeks, Chinese policymakers have unveiled a string of measures in a bid to stimulate activity and spur household consumption. On Saturday, China’s finance minister paved the way for the country’s largest economic support package in years. Lan Fo’an said at a press conference that the country would issue special bonds to bolster banks, signalling an impending spending spree to shore up the property market and ease local government debt. The plan is part of a series of actions undertaken by Beijing to draw a line under a years-long property sector crisis and chronically low consumption that has plagued the economy. Also on Saturday, China’s top banks said they would lower interest rates on existing mortgages from October 25. Officials have said that Beijing’s annual economic growth target of around five percent is still within reach. But many experts consider that ambitious as a property sector crisis and high youth unemployment continue to complicate efforts to achieve a full post-pandemic recovery.