China is facing its longest deflationary streak in decades, with the GDP deflator dropping 0.7% in the fourth quarter of 2025, extending the decline to 11 consecutive quarters. This prolonged deflation has outlasted the two-quarter drop following the 2008 Financial Crisis and has been marked by 40 consecutive months of falling producer prices, driven largely by weak consumer demand and a struggling property market. The economic situation is compounded by Chinese factories producing more than can be absorbed domestically, resulting in significant price cuts. In response, Chinese authorities have been emphasizing stimulus measures to boost consumer confidence and tackle such structural challenges.
China endures longest deflationary streak in decades
