In July, driven by international factors, the Consumer Price Index (CPI) saw a month-on-month decline of 0.1% but a year-on-year increase of 0.5%. Excluding food and energy prices, the core CPI rose 0.3% month-on-month and 0.9% year-on-year, maintaining a generally moderate upward trend. While demand in some domestic industries increased, the Producer Price Index (PPI) fell 0.7% month-on-month due to imported and seasonal factors. On a year-on-year basis, PPI rose 3.5%, with the pace of growth slowing by 0.6 percentage points from the previous month.

CPI Month-on-Month Decline Narrows, Year-on-Year Rise Remains Moderate

On a month-on-month basis, the national CPI decreased by 0.1%, narrowing its decline by 0.2 percentage points from the previous month. Fluctuations in international market prices drove domestic gasoline prices down by 10.7%, a 5.8 percentage point larger drop than the previous month, contributing approximately 0.35 percentage points to the month-on-month CPI decline. Food prices remained flat compared to the previous month, which was 0.6 percentage points below the seasonal trend. Among food items, fresh vegetable prices rose by 1.3%, and egg prices fell by 2.1%, both significantly below seasonal norms. With ample supply from seasonal fruits entering the market, fresh fruit prices dropped by 3.8%, contributing about 0.07 percentage points to the month-on-month CPI decline. The combined effects of comprehensive regulatory policies on pig production capacity and extreme weather events like high temperatures and heavy rains in some regions, which raised transportation costs, led to a 4.1% increase in pork prices, reversing a 0.8% decline in the previous month. This contributed approximately 0.07 percentage points to the month-on-month CPI rise. The iteration and upgrade of consumer electronics, driven by artificial intelligence, increased demand for related products, raising prices for tablet computers, computers, and mobile phones by 11.3%, 5.5%, and 1.0%, respectively, together contributing about 0.03 percentage points to the month-on-month CPI increase. Service prices rose by 0.4% from the previous month, reversing a flat trend, contributing approximately 0.21 percentage points to the month-on-month CPI increase. Within services, summer travel demand boosted prices for travel agency fees, hotel accommodation, airfares, and vehicle rental by 7.2%, 6.5%, 4.2%, and 3.6%, respectively, collectively contributing 0.10 percentage points to the month-on-month CPI rise. Ongoing policy adjustments in some regions increased medical service prices by 1.1%, contributing 0.07 percentage points to the month-on-month CPI increase.

On a year-on-year basis, the national CPI rose by 0.5%, maintaining a moderate increase. The year-on-year CPI growth rate slowed by 0.5 percentage points from the previous month, primarily due to a smaller rise in gasoline prices. Gasoline prices increased by 1.0%, a 16.0 percentage point slowdown from the previous month, reducing its upward impact on CPI by about 0.45 percentage points and pulling the energy price growth rate down to 0.6%. Industrial consumer goods excluding energy saw a price increase of 1.5%, a 0.2 percentage point slowdown from the previous month, contributing approximately 0.37 percentage points to the year-on-year CPI rise. Among these, prices for gold jewelry, personal care products, and household appliances rose by 24.6%, 1.7%, and 0.2%, respectively, with all growth rates slowing, collectively contributing 0.13 percentage points to the year-on-year CPI increase. Prices for computers, tablet computers, and mobile phones rose by 17.4%, 17.2%, and 8.5%, respectively, with all growth rates expanding, together contributing 0.14 percentage points to the year-on-year CPI increase. Service prices rose by 0.7%, a 0.1 percentage point slowdown from the previous month, contributing approximately 0.36 percentage points to the year-on-year CPI increase. Within services, medical service prices rose by 4.3%, a 0.9 percentage point acceleration from the previous month, contributing 0.28 percentage points to the year-on-year CPI rise. Prices for domestic services, dining out, and education services rose by 1.3%, 1.0%, and 0.6%, respectively, remaining generally stable. Food prices fell by 1.5%, narrowing their decline by 0.1 percentage points from the previous month, contributing approximately 0.25 percentage points to the year-on-year CPI decrease. Within food, pork prices fell by 13.3%, narrowing their decline by 2.6 percentage points from the previous month, contributing 0.25 percentage points to the year-on-year CPI decline. Prices for fresh vegetables, fresh fruits, grains, cooking oils, and milk fell between 0.3% and 1.5%. Egg prices rose by 17.8%, a 2.2 percentage point slowdown from the previous month. Prices for mutton, beef, and poultry meat rose between 1.6% and 6.2%.

PPI Falls Month-on-Month, Year-on-Year Growth Rate Decreases

On a month-on-month basis, the national PPI fell by 0.7%, widening its decline by 0.4 percentage points from the previous month. Key characteristics of this month's PPI month-on-month movement include: First, imported factors led to price declines in domestic related industries. Prices for oil and gas extraction, refined petroleum product manufacturing, and organic chemical raw material manufacturing fell by 11.8%, 8.4%, and 4.2%, respectively. Prices for non-ferrous metal mining and dressing, and non-ferrous metal smelting and rolling processing fell by 2.1% and 1.7%, respectively. These five industries collectively contributed approximately 0.65 percentage points to the month-on-month PPI decline. Second, seasonal factors drove price declines in some industries. Due to frequent high temperatures, rain, and typhoons in July, construction project progress slowed, leading to price drops of 0.8% and 0.5% in ferrous metal smelting and rolling processing, and non-metallic mineral products, respectively. Increased hydropower and wind power generation led to price declines of 10.3% and 3.9%, respectively. These four industries collectively contributed about 0.11 percentage points to the month-on-month PPI decline. Third, industrial transformation, upgrading, and quality consumption expansion boosted demand and prices in some sectors. New growth drivers grew stronger, with thriving areas like artificial intelligence, high-end equipment, and new materials. Prices for intelligent unmanned aerial vehicle manufacturing, carbon new materials, and shipbuilding and related equipment manufacturing rose by 2.5%, 0.4%, and 0.3%, respectively. Quality consumption grew rapidly, with prices for smart home consumer devices and skincare cosmetics manufacturing rising by 3.4% and 0.7%, respectively.

On a year-on-year basis, the national PPI rose by 3.5%, a 0.6 percentage point slowdown from the previous month. By industry, among the major sectors with price increases, oil and gas extraction, petroleum, coal, and other fuel processing, and chemical raw material and chemical product manufacturing rose by 3.2%, 8.2%, and 9.1%, respectively. Non-ferrous metal mining and dressing, and non-ferrous metal smelting and rolling processing rose by 22.6% and 20.2%, respectively. Ferrous metal smelting and rolling processing rose by 2.7%, with all growth rates slowing from the previous month. These six industries collectively contributed approximately 2.55 percentage points to the year-on-year PPI increase. Coal mining and washing rose by 27.1%, electrical machinery and equipment manufacturing rose by 5.7%, and computer, communication, and other electronic equipment manufacturing rose by 4.4%, with all growth rates expanding from the previous month. These three industries collectively contributed approximately 1.53 percentage points to the year-on-year PPI increase. The combined upward pull from these nine industries on PPI was 0.56 percentage points less than the previous month. The five industries with the greatest downward pressure on prices were: electricity and heat production and supply, automobile manufacturing, non-metallic mineral products, pharmaceutical manufacturing, and beverage, alcohol, and refined tea manufacturing. Their price declines ranged from 2.3% to 5.7%, collectively contributing about 0.76 percentage points to the year-on-year PPI decline, a reduction of 0.05 percentage points from the previous month.