China’s Consumer Price Index (CPI) fell in February for the first time in 13 months, indicating that the country’s economy continues to face deflationary pressures.

According to the latest official data released by the National Bureau of Statistics of China on March 9, the CPI, which measures inflation and deflation in the economy, decreased by 0.7 percent year-on-year in February, marking the first annual decline since February 2024.

Urban areas and rural areas both saw a decrease of 0.7 percent. Food prices fell by 3.3 percent, while non-food prices dropped by 0.1 percent. The price of consumer goods dropped by 0.9 percent, and service prices fell by 0.4 percent. The figures reflect the decline in prices of consumer goods and services.

The CPI in February fell by 0.2 percent compared to January, and the average CPI for January and February was down 0.1 percent compared to the same period last year.

China’s Producer Price Index (PPI), which measures the wholesale price of goods, fell by 2.2 percent year-on-year in February and declined by 0.1 percent month-on-month. The average PPI for January and February dropped by 2.2 percent compared to the same period last year, reflecting the decline in factory prices for industrial producers.

Besides weak domestic demand and an early Lunar New Year holiday, which happened in late January this year rather than February, two other factors contributed to China’s falling prices in February, according to Dong Lijuan, a statistician at the government’s statistics bureau.

Better weather boosted farm production, driving down the price of fresh vegetables, and automakers also stepped up promotions to try to boost sales, reducing prices for new cars, she wrote in an analysis.

The Chinese communist regime emphasized the importance of boosting domestic demand and consumer spending in its annual report to the National People’s Congress, China’s rubber-stamp legislature, delivered on March 5.

In the report, Chinese Premier Li Qiang said that the growth target for China’s gross domestic product (GDP) is around 5 percent for 2025. The goal set for the urban surveyed unemployment rate is around 5.5 percent, with more than 12 million new urban jobs; and the CPI will increase by about 2 percent, which is the lowest since 2005.

Despite a series of economic revitalization and consumption-promoting measures introduced by the regime, observers believe that the shadow of deflation is unlikely to dissipate for China, especially against the backdrop of a burgeoning trade war with the United States.

“Li Qiang said that the CPI target is 2 percent but at present, due to the sluggish investment market, the recession of the real estate market, the bankruptcy of a large number of small and medium-sized private enterprises, and the lack of consumer confidence among residents, these factors are obviously unlikely to drive up prices,” Chinese American economist Davy J. Wong previously told The Epoch Times.

About the potential trade war, Wong believes that since China’s export-oriented manufacturing industry is highly dependent on the U.S. market, this [incoming] trade war will be much more difficult for China than the one in 2018 during Trump’s first presidency.

“China is currently at its worst economic situation in nearly 20 years. China’s entire economy relies on foreign trade, and its foreign trade relies on exports, mainly to the European and American markets, with the U.S. market accounting for more than 65 percent,” he said.

At the National People’s Congress on March 9, government ministers told journalists that they would continue working to stabilize the real estate market. They also acknowledged that expanding employment in the current economic climate would be “a heavy task.”

Wang Xiaoping, the minister of human resources and social security, stated that while the employment situation shows signs of improvement, the foundation for economic recovery remains fragile.

“The pressure on overall employment remains unchanged,” she said, highlighting the challenges people face in finding jobs and increasing their incomes.

The Associated Press contributed to this report.

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