China’s Inflation Surge: A Turning Point or Temporary Blip? In a surprising twist, China’s consumer price index (CPI) hit a 21-month high in November 2025, climbing to 0.7% year-on-year—a sharp jump from October’s 0.2%. But here’s where it gets controversial: this spike, driven largely by a 7.2% monthly surge in fresh vegetable prices, has reignited debates about whether China is finally shaking off deflationary pressures. While food inflation inched back into positive territory at 0.2%, pork prices—down 15%—continue to drag down the overall food category, leaving year-to-date food inflation at a stubborn -1.7%. And this is the part most people miss: despite the headline CPI’s rise, core inflation stabilized at 1.2%, ending six months of acceleration, while non-food prices dipped slightly to 0.8% due to falling transport and communication costs. Meanwhile, the producer price index (PPI) remained in negative territory at -2.2%, marking its 38th consecutive month of decline, though some non-ferrous metal industries showed signs of life. So, what does this mean for China’s economy? ING predicts that 2025 could end with a marginally positive inflation rate, potentially paving the way for the People's Bank of China to ease policies further in 2026—especially if core inflation stays steady and food prices continue to recover. Early 2026 might even see rate cuts totaling 20 basis points. But here’s the kicker: while this shift offers relief to those worried about prolonged deflation, it also raises questions about the sustainability of this recovery. Lynn Song, ING’s Chief Economist for Greater China, highlights the surge in vegetable prices as the key driver, but is this enough to sustain momentum? What do you think? Is China’s inflation rebound a sign of economic recovery, or just a temporary blip? Share your thoughts in the comments—this is one debate you won’t want to miss!
