FX.co ★ China Producer Prices Drop the Least in 16 Months

China's producer prices experienced a reduction of 1.9% year-on-year in December 2025, showing an improvement from the 2.2% decrease observed in November and marking the 39th consecutive month of deflation. This latest figure surpassed market forecasts, which anticipated a 2.0% decline, and represents the smallest drop since August 2024, attributed to governmental efforts aimed at stimulating domestic demand. In December, the prices of consumer goods saw a slower decline (-1.3% compared to -1.5% in November), with less significant decreases in durable goods (-3.5% compared to -3.6%) and clothing (-0.1% compared to -0.3%). Meanwhile, food prices continued to decline moderately (-1.5%, consistent with the previous month). The costs of daily-use goods, however, experienced a marginally quicker rise (1.4% as opposed to 1.1%). Concurrently, the decline in production material prices slowed (-2.1% compared to -2.4%), with categories such as mining (-4.7% compared to -6.1%), raw materials (-2.6% compared to -2.9%), and processing (-1.6% compared to -1.9%) witnessing a more moderate reduction. Over the entirety of 2025, producer prices contracted by 2.6%. On a month-to-month basis, the Producer Price Index (PPI) increased by 0.2% in December, following a 0.1% rise in November.