China deflation accelerated in November

BEIJING

Deflation in China accelerated in November, official data showed on Dec. 9, underlining the difficulties the world's second-largest economy faces in reviving slowing demand.

The figures came after President Xi Jinping said on Dec. 8 that the Asian giant's post-pandemic recovery was "still at a critical stage" and warned of "increasing adverse factors in the international political and economic environment."

The consumer price index, the main gauge of inflation, fell 0.5 percent year-on-year, according to the National Bureau of Statistics (NBS).

NBS official Dong Lijuan said in a statement that the decline was linked to "downward fluctuations in the prices of energy and food."

The corresponding figure for October was a decline of 0.2 percent.

While deflation suggests goods were cheaper, it poses a threat to the broader economy as consumers tend to postpone purchases in the hopes of further reductions.

A lack of demand can then force companies to cut production, freeze hiring or lay off workers, while potentially also having to discount existing stocks - dampening profitability even as costs remain the same.

China's economy grew a modest 4.9 percent in the third quarter, slightly below Beijing's annual target of around five percent, which is one of its lowest in years.

Xi urged measures to boost the economy at a meeting of the ruling Communist Party's Politburo, state broadcaster CCTV reported on Dec. 8.

"It is necessary to focus on accelerating the construction of a modern industrial system, expand domestic demand, (and) prevent and defuse risks," he said.

Officials have struggled to sustain a recovery from the impact of the pandemic, even after removing strict and at times draconian containment measures at the end of 2022.