China: Consumer prices are unchanged year on year in July
Latest reading: Consumer prices were flat year-on-year in July, which followed June’s 0.1% increase. Higher prices for food, clothing, healthcare and education were offset by lower transport costs.
The trend was unchanged, with annual average inflation coming in at June’s 0.1% in July. Consumer prices increased 0.40% in July over the previous month, contrasting the 0.10% fall recorded in June.
Meanwhile, producer prices continued to fall sharply year on year, reflecting huge manufacturing capacity, cut-throat competition in sectors such as electric vehicles, and mild domestic demand.
Panelist insight: On producer prices, Nomura analysts said:
“Producer prices remained weak across the industrial chain, with factory-gate prices for durable goods continuing to deteriorate. The sustained PPI deflation lends support to our view that, without a clear fix to the ongoing property crisis and implementing structural reforms to boost household income and enhance social security benefits, deflation is likely to persist.”