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Consumer prices in China barely rose in December, underscoring deflationary pressures in the world's second-largest economy that have pushed bond yields to record levels.
Consumer price growth was 0.1 percent last month compared with a year ago, which was in line with the average forecast of analysts from Reuters and the slowest in nine months. Thursday's reading was lower than the 0.2 percent growth in the previous month.
The Producer Price Index, which measures factory gate prices, fell 2.3 percent, slightly better than analyst estimates of a 2.4 percent decline and 2.5 percent contraction in November. The December number means the gauge has been in contractionary territory for 28 months.
China's economy The country has been heading toward outright deflation for months, as a three-year decline in the real estate market undermines consumer demand, prompting the industry to oversupply.
Beijing is expected to achieve its 5 percent economic growth target for 2024 through a combination of booming exports, which have boosted its price competitiveness in overseas markets due to deflation at home, and government stimulus measures.
But analysts warn that the formula is starting to weaken, with incoming US President Donald Trump threatening to impose harmful tariffs that could lead to a sharp slowdown in Chinese export growth.
Beijing is also struggling to stimulate domestic demand though Monetary policy pivot in September It largely targeted the stock market and sought to boost household wealth through higher stock prices.
The yield on China's 10-year government bonds has hovered around record lows since the beginning of the year, which analysts said reflects investors' expectations of a deflationary, low-growth outlook for the economy.
Chinese stocks were mixed in early trading on Thursday. The benchmark CSI 300 index was flat, while Hong Kong's Hang Seng Index rose 0.4 percent. Yields on 10-year and 30-year sovereign bonds were flat.
In currency markets, the renminbi remained stable against the dollar at 7.33 renminbi after the People's Bank of China fixed the daily trading rate at 7.19 renminbi.
The Chinese currency is allowed to trade within 2 percent of the daily rate set by the central bank.
