China’s consumer prices rise 0.5% on year, easing from June
China’s consumer and factory-gate price growth both slowed more than expected in July, the National Bureau of Statistics said Sunday. The producer-price index rose 3.5% from a year earlier, slowing from a 4.1% increase in the prior month and missing the 3.9% gain economists expected in a Wall Street Journal poll.
Factory-gate prices rose for a fifth consecutive month, lifted by surging oil prices amid the Middle East conflict. The run follows a protracted 41-month decline that began in late 2022. On a monthly basis, producer prices declined 0.7% in July — a broader drop than June’s 0.3% fall — as global oil prices retreated and unfavorable weather conditions took a toll on the world’s second-largest economy.
Consumer prices rose 0.5% from a year earlier, decelerating from June’s 1.0% growth and missing the 0.8% rise tipped by the economists surveyed. Core CPI, which excludes volatile food and energy prices, rose 0.9% from a year earlier in July, cooling from a 1.0% rise in the previous month.
The statistics bureau said the headline slowdown was primarily driven by decelerating gasoline price growth. Gasoline prices rose by 1.0%, with the growth rate decelerating by 16.0 percentage points compared with the previous month.
Zhiwei Zhang, an economist at Pinpoint Asset Management, said the weakness in both CPI and PPI inflation is consistent with other activity data, including the purchasing managers index, which also dropped more than expected. The report noted China’s economic growth had cooled to its weakest pace in more than three years during the second quarter, as a surge in AI-driven exports wasn’t enough to offset a sluggish domestic economy and weak consumer spending.
Zhang said the Politburo in July signaled stronger fiscal spending as the policy response. “The transmission of the fiscal spending will take time. We need a couple of months to monitor how effective the fiscal spending will help to boost domestic demand,” he said.