Key Facts
• On August 9, China’s National Bureau of Statistics released July price data.
• Consumer Price Index (CPI) remained flat year-on-year in July 2025.
• Producer Price Index (PPI) dropped 3.6% year-on-year, exceeding the forecasted 3.3% decline.
• PPI has been declining for over two years, reflecting industrial overcapacity issues.
• June’s PPI also recorded a 3.6% drop, marking a consistent trend.
• CPI decelerated from June’s 0.1% year-on-year increase to flat growth in July.
• Food prices fell 1.6% year-on-year, widening from June’s 0.3% decline.
• Month-on-month, CPI rose 0.4%, surpassing the forecasted 0.3% increase.
• Core inflation, excluding food and fuel, rose 0.8% year-on-year, up from June’s 0.7%.
• Prolonged real estate downturn and U.S.-China trade tensions weigh on economic activity.
• Extreme weather, including heatwaves and heavy rains, added pressure to the economy.
Summary
China’s July 2025 economic data revealed mixed inflation trends. The Consumer Price Index (CPI) remained flat year-on-year, while the Producer Price Index (PPI) fell 3.6%, exceeding the forecasted 3.3% decline. This marks over two years of PPI contraction, highlighting unresolved industrial overcapacity issues. Month-on-month, CPI rose 0.4%, surpassing expectations, driven by core inflation’s 0.8% year-on-year increase. However, food prices dropped 1.6%, reflecting weaker consumer demand. The prolonged real estate slump and U.S.-China trade uncertainties continue to hinder economic recovery. Additionally, extreme weather events, including heatwaves and heavy rains, have further strained the economy. These factors underscore the challenges facing China’s economic stability.
