China Consumer Prices Fall the Most in 6 Months

China’s consumer prices dropped 0.4% yoy in August 2025, following a flat reading in the prior month and missing market forecasts of a 0.2% fall. It was the fifth time of consumer deflation this year and the sharpest pace since February. Food prices fell much steeper (-4.3% vs -1.6% in July), marking the strongest drop in near four years. However, non-food prices accelerated (0.5% vs 0.3%), reflecting the impact of Beijing’s consumer goods subsidies, with further increases in housing (0.1% vs 0.1%), clothing (1.8% vs 1.7%), healthcare (0.9% vs 0.5%), and education (1.0% vs 0.9%). At the same time, transport cost fell at a slower rate (-2.4% vs -3.1%). On a monthly basis, the CPI was flat, below forecasts of a 0.1% increase, after a 0.4% gain in July.