The offshore yuan edged higher to around 6.97 per dollar, extending gains from the previous session as investors assessed the latest inflation figures. Annual consumer price inflation edged up to 0.8% in December 2025 from 0.7% in November, marking its highest level since February 2023. Meanwhile, producer prices fell 1.9% year-on-year, moderating from a 2.2% decline in the prior month and better than market forecasts of a 2% drop. Despite the uptick in consumer inflation, the latest data are unlikely to materially shift the monetary policy outlook, as price pressures remain subdued overall. For 2025 as a whole, average annual inflation was flat, the lowest since 2009 and well below the government’s target range of around 2%. Earlier this week, the People’s Bank of China reiterated its commitment to supporting growth, signaling readiness to cut the reserve requirement ratio and lower key policy rates to ensure ample liquidity and maintain accommodative financial conditions.
