In September, the consumer price index (CPI) in China dropped by 0.3% year-on-year, with urban areas seeing a 0.2% decrease and rural areas experiencing a 0.5% decline. Food prices decreased by 4.4%, and consumer goods prices fell by 0.8%. CPI is a crucial indicator for measuring inflation. The drop in CPI in September signals renewed deflationary pressures facing the Chinese economy.
The National Bureau of Statistics of China reported on October 15 that in September 2025, the national consumer price index (CPI) decreased by 0.3% year-on-year. In August, the CPI decreased by 0.4%.
The main reason for the 0.3% year-on-year drop in CPI in September was the significant decline in food prices.
The overall prices of food, tobacco, and alcohol products dropped by 2.6% year-on-year, exerting a downward impact of around 0.74 percentage points on the CPI.
Within the food category, vegetable prices saw a 13.7% decrease, contributing to a 0.35 percentage point decrease in the CPI; egg prices fell by 11.9%, leading to a 0.08 percentage point CPI decrease; and fresh fruit prices declined by 4.2%, resulting in a 0.09 percentage point CPI decrease, all within substantial decline ranges.
The most notable impact came from the 8.4% decrease in meat prices, with pork prices alone dropping by 17.0%, dragging down the CPI by about 0.26 percentage points.
Consumer goods prices fell by 0.8%, continuing to show negative growth, reflecting the sluggishness in the manufacturing and durable goods markets.
Transportation and communications prices decreased by 2.0% year-on-year, mainly influenced by automobile and energy prices.
Month-on-month data has stabilized, but lacks momentum. Compared to the previous month, overall CPI rose by 0.1% in September, indicating signs of price stabilization in the short term.
The 0.7% month-on-month drop in pork prices indicates that destocking pressures are still ongoing.
Service prices declined by 0.3% month-on-month, possibly due to price reductions in activities such as travel following the Mid-Autumn Festival and the end of the summer holiday season.
In addition, in September, China’s producer price index (PPI) dropped by 2.3% year-on-year, marking the 36th consecutive month of decline. This decrease is narrower than the 2.9% decline recorded in August.
The year-on-year negative growth of CPI in September has further heightened concerns about China entering a “deflationary spiral”. Continued price declines will suppress business profits, dent consumer confidence, and ultimately lead to a slowdown in economic activities.
When reporting on the 0.3% year-on-year decline in the consumer price index (CPI) in China for September, foreign media have tended to focus on the persistent threat of deflation and the weakness in domestic demand.
The South China Morning Post reported that China is facing ongoing monetary tightening pressure, with the dual challenges of weak domestic demand and surplus supply. Trade uncertainties have impeded efforts to clear excess inventories by suppliers.
The reports uniformly acknowledge that continued price decreases reflect weak domestic consumption and business confidence, particularly against the backdrop of the enduring slump in the real estate market, which continues to dampen household consumption willingness.