China consumer prices plunge at fastest rate for 15 years as deflation fears deepen

Plummeting food prices feed steep annual drop amid renewed calls to stimulate economy and offset weakening demand

China’s consumer prices fell at their fastest pace in 15 years in January, as the world’s second-largest economy sank deeper into deflation amid weakening demand.

Data released on Thursday showed that China’s consumer price index tumbled last month, falling by 0.8% compared with a year earlier. It marks the fourth consecutive month of declines, as well as the sharpest drop since September 2009, when the global economy was still grappling with aftershocks from the 2008 banking crisis.

Food prices were the biggest drag on the headline inflation figure, having fallen by 5.9% on an annual basis, due in part to a 17% slump in pork prices. Fresh vegetables fell by 12.7%, while fruit dropped by 9.1%.

China’s economy has been struggling to recover from the Covid-19 pandemic after restrictions were lifted in late 2022. It has also been dealt a significant blow by the contraction in its indebted property sector, leading to the developer Evergrande being ordered to liquidate last month.