China’s consumer inflation eased further in June, highlighting subdued domestic price pressures even as producer inflation climbed to its highest level in nearly three years. Consumer prices fell -0.3% mom, steeper than the expected -0.2% decline, while annual CPI slowed from 1.2% yoy to 1.0%, undershooting expectations of 1.1%. Core CPI also edged down from 1.1% to 1.0%, its slowest pace since January, suggesting underlying inflation remained contained despite steady economic activity.
The moderation in consumer inflation reflected softer price increases for industrial consumer goods, particularly gold jewellery and gasoline, according to the National Bureau of Statistics. The decline in energy-related prices followed the sharp fall in global crude oil prices after the US and Iran reached a ceasefire in June, helping ease imported inflation pressures. The data indicate that weaker energy costs are beginning to offset broader price pressures facing households.
In contrast, producer prices continued to strengthen. PPI accelerated from 3.9% to 4.1% yoy, matching market expectations and marking a fourth consecutive monthly increase, with annual producer inflation reaching its highest level since July 2022. The NBS attributed the gains to higher prices in coal mining, electrical machinery, electronics and ferrous metals. However, producer prices fell -0.3% month-on-month after June’s collapse in global oil prices, suggesting upstream inflation may moderate further in coming months if energy prices remain contained.
| Indicator | June | May | Expectation |
|---|---|---|---|
| CPI (MoM) | -0.3% | -0.1% | -0.2% |
| CPI (YoY) | 1.0% | 1.2% | 1.1% |
| Core CPI (YoY) | 1.0% | 1.1% | — |
| PPI (MoM) | -0.3% | — | — |
| PPI (YoY) | 4.1% | 3.9% | 4.1% |
