Consumer prices in China fell in October as the world’s second-largest economy struggled with an uneven recovery from the coronavirus pandemic.

Data released by China’s National Bureau of Statistics on Thursday showed that the consumer price index fell by 0.2% year-on-year in October, exceeding the 0.1% drop expected by economists polled by Reuters.

Previously, China’s CPI unexpectedly remained flat in September, highlighting the need for further policy support.

Producer prices fell 2.6%, slightly lower than the 2.7% expected, and have been in negative territory for 13 consecutive months. China’s PPI in September was 2.5%, indicating that deflationary pressure on factories still exists.

“China is still in a deflationary environment. Domestic demand remains sluggish,” said Zhang Zhiwei, president and chief economist of Pindian Asset Management.

Beijing has provided targeted policy support despite recent data showing growth remains sluggish. The ongoing debt crisis of China’s two largest property developers has further damaged consumer confidence. China’s real estate industry accounts for approximately 30% of its economy.

“Domestic demand is likely to improve next year as the budget deficit rises and property developers may receive government support,” Zhang said.

Investors will now pay close attention to this year’s Double Eleven shopping festival, which ends on November 11, to gauge the intensity of Chinese consumption.

But enthusiasm for the shopping festival has waned.

“I think this year’s Singles’ Day promotion did not live up to expectations,” Hong Hao, partner and chief economist at Grow Investment Group, told CNBC’s “Squawk Box Asia.”

“Since last year, people no longer spend a lot of money on Double Eleven promotions, so this year will be a sluggish year for sales,” Hong said.