Data from the National Bureau of Statistics showed on Thursday that consumer prices in China rose 0.1% year-on-year, in line with expectations. However, the slower month-on-month increase fueled deflation concerns.

Analysts polled by Reuters had expected the consumer price index to fall year-on-year to 0.1% in December from 0.2% in November.

China’s producer price inflation fell 2.3% year-on-year in December, falling for the 27th month. The figure is slightly better than the Reuters estimate of a 2.4% decline.

Sustained near-zero consumer inflation suggests China continues to grapple with weak domestic demand, which has raised the specter of deflation.

Despite a series of stimulus measures introduced by Beijing since last September, including interest rate cuts, support for stock and real estate markets and increased bank lending, consumption has failed to pick up.

Just on Wednesday, China expanded its consumer trade-in program, which aims to boost consumption through device upgrades and subsidies.

However, certain metrics suggest that China’s economy could see some recovery. The country’s factory activity has increased over the past three months, although the pace of expansion slowed in December.

“Although China’s economy showed some signs of recovery following the policy change in September, it continues to face significant challenges,” said Carlos Casanova, senior economist at private bank Union Bancaire Privée, citing headwinds in the country’s real estate sector and trade tensions with the USA

Louise Loo, senior economist at Oxford Economics, expects China’s path to reflation will still fall short of most estimates due to continued weakness in consumer spending propensity.

China’s onshore yuan hit a 16-month low of 7.3316 against the dollar on Wednesday as government bond yields rose and the dollar strengthened.