The Party in Beijing still has a lot of work to do warding off the deflation demon that’s stalked the world’s second largest economy for more than two years.

Price data covering January released on Wednesday by Xi’s statisticians showed a nascent, gold-assisted uptick in the pace of consumer price growth dissipated at the beginning of the new year, partly on base effects.

Headline CPI ran just 0.2% last month, according to the figures, tallied using new baskets that assign more weight to, among other things, restaurant food, entertainment and healthcare, while deemphasizing housing.

Core CPI likewise downshifted, running 0.8% in January. That’s the first sub-1% read since August.

As noted above, some (a lot) of the apparent deceleration was related to the timing of the Lunar New Year holiday, which began in January last year but falls entirely in February in 2026.

Math’s just math, but we shouldn’t make too many excuses in this context even if, by virtue of being based on simple arithmetic, these excuses are valid. The inescapable reality is that China’s mired in disinflation. The longer that goes on, the harder it’ll be to extricate the economy.

Inflation for the full-year 2025 was 0%. So, no inflation. That might sound good in the West, where the body politic’s struggling to cope with a never-ending affordability crisis, but it’s not. Not good, I mean. China, like every other developed or nearly-developed nation, aims for a moderate, “healthy” inflation impulse in order to ensure some baseline level of organic growth.

If you squint at the chart, you can see that factory gate deflation moderated in January. The -1.4% read was the least severe since July of 2024. But analysts were quick to note that metals prices are behind the apparent improvement, which is to say it’s not a function of consumer demand.

January marked 40 months of PPI deflation in China.