China inflation slows in July, below forecast
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Sluggish domestic consumption has threatened to weigh down national growth in China, even as exports and certain high-tech sectors boom.
PHOTO: REUTERS
- China's consumer price index rose by 0.5 per cent year-on-year in July, below the 0.8% forecast and the slowest increase since January.
- Factory-gate prices grew 3.5 per cent in July, slower than June's 4.1 per cent and below expectations, showing continued deflationary pressure.
- Rising exports, especially in AI tech, are supporting manufacturing amid weak domestic consumption; government plans stronger fiscal spending to boost demand.
AI generated
BEIJING – China’s consumer and factory prices grew slower than expected in July, official data showed on Aug 9, as the world’s second-largest economy confronts persistent deflationary pressure.
The consumer price index, a key gauge of inflation, eased to 0.5 per cent year-on-year, according to the National Bureau of Statistics (NBS).
That was lower than the 0.8 per cent forecast by a Bloomberg survey and the slowest rise since January.
Sluggish domestic consumption has vexed Beijing for several years, threatening to weigh down national growth even as exports and certain high-tech sectors boom.
Many economists contend that China must shift towards a growth model driven more by household spending than the traditional engines of past decades, including real estate and infrastructure investment.
A gauge of China’s factory-gate prices, which measures the cost of goods at the first point of sale, also grew at a slower pace in July, NBS data showed on Aug 9.
The producer price index increased 3.5 per cent year-on-year in July, slowing from 4.1 per cent in June and lower than the 3.8 per cent forecast by Bloomberg.
“Economic momentum softened in (the second quarter)“ of 2026, wrote Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, in a note on the data on Aug 9.
A meeting of the ruling Communist Party’s high-ranking Politburo in late July “signalled stronger fiscal spending as the policy response”, wrote Zhang, adding that a couple of months are needed to assess how it may boost domestic demand.
The latest figures come two days after trade data for July showed exports and imports soaring, boosted by increased overseas demand for AI-related tech products.
The surge in exports in 2026 has helped China’s vast manufacturing sector through the prolonged slump in domestic spending. AFP
