A woman looks at there phone as she carries shopping bags next to a character from Pop Mart’s hugely popular Labubu dolls series while visiting the Pop Land theme park on July 17, 2025 in Beijing, China.
Kevin Frayer | Getty Images News | Getty Images
China’s consumer prices were unchanged in July, while producer prices fell more than expected, underscoring the impact of sluggish domestic demand and persistent trade uncertainty on consumer and business sentiment.
Factory-gate prices have been declining for more than two years, and Saturday’s data suggest early-stage efforts to tackle price competition have yet to yield results.
Deflationary pressures have prompted Chinese authorities to address overcapacity in key industries. However, the latest round of industrial restructuring appears to be a pared-down version of the sweeping supply-side reforms launched a decade ago that were pivotal in ending a deflationary spiral.
The consumer price index was flat year-on-year in July, compared with a 0.1% rise in June, National Bureau of Statistics data showed on Saturday, beating a Reuters poll forecast of a 0.1% slide.
Food prices fell 1.6%, following a 0.3% decline in June.
Extreme weather added to the economic strain, with sweltering heat gripping much of China’s eastern seaboard last month and heavier-than-usual downpours lashing the country with the East Asian monsoon stalling over its north and south.
On a monthly basis, the CPI edged up 0.4%, against a 0.1% drop in June and exceeding forecasts for a 0.3% rise.
Core inflation, which excludes volatile food and fuel prices, was 0.8% in July from a year earlier, quickening from June’s 0.7%.
A prolonged housing downturn and a fragile trade truce with the U.S. are weighing on consumer spending and factory activity.
Policymakers are prioritising efforts to curb what they view as disorderly competition in the auto and other key industries, rather than rolling out immediate stimulus measures, but analysts see limited potential for the campaign to significantly boost final demand.
The producer price index (PPI) fell 3.6% year on year in July, missing economists’ forecast of a 3.3% slide. It fell 3.6% in June too, which was the lowest since July 2023.