Amid lower domestic
fuel prices and weak domestic demand, the national consumer price index rose 0.5
per cent last month
·
PPI Growth Slows: China’s Producer Price Index (PPI) rose
3.5% year-on-year in July, down from 4.1% in June.
·
Below Expectations: The July PPI increase was below the
3.98% economists had expected.
·
Monthly Decline: PPI fell 0.7% month-on-month,
following a 0.3% decline in June.
·
Consumer Inflation Weakens: China’s CPI
rose just 0.5% year-on-year, down sharply from 1% in June and below
the expected 0.85%.
·
Core CPI: Core inflation, excluding food and energy,
increased 0.3%.
·
Lower Fuel Prices: Falling domestic fuel prices eased production
costs, with prices in oil extraction and refining declining 11.8% and
8.4%, respectively, from the previous month.
·
Weather Impact: High temperatures, heavy rainfall and
typhoons disrupted construction activity, contributing to declines in prices for
ferrous metals and non-metallic mineral products.
·
Food Prices: Pork prices increased 4.1% month-on-month
in July after declining 0.8% in June, partly reflecting higher transportation costs.
·
41-Month Deflation Ends: China’s factory-gate
prices returned to annual growth in March, ending a 41-month period of
PPI deflation, before accelerating to 4.1% in June.
·
Manufacturing Pressure: Despite the
PPI rebound, manufacturers remain squeezed by higher input costs and weak domestic
demand, limiting their ability to pass costs on to consumers.
·
Key Impact: The July slowdown indicates moderating
inflationary pressure in China, while weak domestic demand continues to pose
challenges for manufacturers and economic growth.
[ABS News Service/10.08.2026]
China’s
factory-gate prices growth slowed in July, as lower domestic fuel prices eased cost
pressures triggered by the US-Israel war on Iran, while high temperatures dragged
manufacturing.
The producer
price index (PPI) rose by 3.5 per cent year on year last month, compared with 4.1
per cent in June, according to data released by the National Bureau of Statistics
(NBS) on Sunday.
The reading
fell short of a projection of 3.98 per cent from economists polled by financial
data provider Wind. On a month-on-month basis, the PPI fell 0.7 per cent, following
a decline of 0.3 per cent in June.
The national
consumer price index (CPI), a major gauge of inflation, rose 0.5 per cent year on
year, the slowest pace since January, compared with 1 per cent in June. The reading
fell short of the 0.85 per cent rise projected in the Wind survey.
On a month-on-month
basis, the CPI fell 0.1 from June. Core CPI, which excludes food and energy prices,
rose 0.3 per cent.
Dong Lijuan,
a senior statistician at the bureau, said that the impact of international factors
affected relevant industries in China. For example, the PPI for oil extraction and
refining dropped 11.8 per cent and 8.4 per cent, respectively, from last month.
A second
factor was seasonal. High temperatures, heavy rainfall and frequent typhoons slowed
construction progress on building projects, leading to price declines of 0.8 per
cent and 0.5 per cent in the ferrous metal smelting and rolling, and the non-metallic
mineral products industries, respectively.
The weather
element also affected the consumer market by driving up transport costs. Pork prices
reversed June’s 0.8 per cent decline to rise by 4.1 per cent in July, on a month-on-month
basis.
Goldman
Sachs analyst Chen Xinquan said in a note on Sunday that
he was “surprised” both PPI and CPI growth had slowed in July compared with a month
earlier. The consumer index moderated mainly on “lower prices for oil-related products
and tourism-related services”, Chen said.
The slower
growth in factory-gate prices was a result of decreased upstream sector prices,
including oil and gas, non-ferrous metals and chemicals, the note added.
Factory-gate
prices returned to growth in March after 41 months of deflation – the longest such
stretch in decades – as the US-Israel war on Iran drove up global energy and commodity
prices. Growth accelerated for four straight months to a near four-year high of
4.1 per cent in June, though prices had already slipped month on month by then.
The rebound
offered little relief to mid- and downstream manufacturers, who remain squeezed
between higher input costs and weak domestic demand, limiting their ability to pass
on those costs.