China is currently experiencing falling prices, with the Consumer Price Index (CPI) dropping 0.5% in November compared to the previous year. This is the largest decline since November 2020 and worse than the predicted 0.1% decrease. The drop in prices has prompted calls for urgent action from Beijing to boost demand and prevent further decline. China has been battling weak prices throughout the year due to a property market slump and subdued consumer confidence. Food prices, particularly pork prices, have been a major factor in the decline, dropping 4.2% in November. Gasoline prices also declined due to low international oil prices. Services inflation has slowed as well. The Producer Price Index (PPI) has also dropped for 14 consecutive months, driven by commodity and raw material prices. The worsening deflationary pressure has raised concerns about China's economic recovery. The People's Bank of China and top officials have pledged to implement measures to expand domestic demand and stimulate consumer spending. Investors are eagerly awaiting details about next year's economic policy, with expectations of imminent cuts to the reserve requirement ratio and policy rates.
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