China Inflation Climbs to 0.8% as Gold Demand Soars; Factory Gate Prices Stabilize

Chinas economic recovery showed signs of traction in December 2025, with inflation data beating expectations and signaling a potential exit from persistent deflationary pressure.

CPI Hits 21-Month High

The Consumer Price Index (CPI) rose 0.8%YoY, edging out the previous 0.7% and marking the highest reading since March 2023.

PPI Deflation Narrows

The Producer Price Index (PPI) fell 1.9%YoY, an improvement from the previous -2.2%. Month-on-month, PPI rose 0.2% for the third consecutive month.

Market Reaction

The data provided a lift to sentiment in the region, with the Shanghai Composite breaching the 4,100 level. Economists suggest that while the threat of deflation is receding, the recovery remains uneven, heavily reliant on policy support and external commodity trends. The Australian Dollar (AUD), often a liquid proxy for Chinese growth, showed muted reaction as traders turned their attention to US payroll data.