China's CPI slows for third month to 0.5% in July

China's consumer price index (CPI) saw a year-on-year increase of 0.5% in July, marking a third consecutive month of slowdown. This figure, released by the National Bureau of Statistics, fell short of analysts' predictions, who had anticipated a less pronounced deceleration. The monthly CPI also moderated its decline, moving from 0.3% to 0.1%, contrary to expectations of a slight rebound.

Fluctuations in international crude oil prices significantly influenced these trends. Gasoline prices in China decreased by 10.7% between June and July, following earlier increases attributed to Middle East conflicts. Additionally, prices for eggs, fruits, and vegetables were noted to be "significantly below their seasonal average." Conversely, demand for electronics, driven by the artificial intelligence boom, contributed to rising costs for items like tablets and computers. Typical summer price hikes were also observed in travel agencies, hotels, and airfare.

Year-on-year, gasoline prices still showed an increase of 1%, though this was 16 percentage points lower than the previous reading. Eggs remained nearly 18% higher than the previous year. The producer price index (PPI) rose 3.5% year-on-year in July, a 0.6-point decrease from June. This index had previously hit its highest mark since July 2022 for three consecutive months, largely due to rising industrial prices influenced by the conflict in Iran. Sectors like oil and gas extraction, crude oil processing, and chemical manufacturing saw significant year-on-year price increases, as did non-ferrous metals. However, these sectors also saw price increases slow down compared to the previous month, with some, like oil extraction, even experiencing month-on-month declines.

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significantly below their seasonal average