In July, the Consumer Price Index (CPI) rose 0.5% year-on-year and fell 0.1% month-on-month, while the Producer Price Index (PPI) rose 3.5% year-on-year and fell 0.7% month-on-month, according to the National Bureau of Statistics. These figures prompt a closer look at current price trends.

Statistical data reveals that the July CPI year-on-year increase was 0.5 percentage points lower than the previous month, marking the first drop below 1% since February. "The slowdown in CPI growth is mainly due to a narrower increase in gasoline prices," said Dong Lijuan, chief statistician at the National Bureau of Statistics. She attributed this to international factors, noting that July's gasoline price rise was 16 percentage points less than the previous month, reducing its impact on CPI by about 0.45 percentage points and pulling energy price growth down to 0.6%.

Xu Guangjian, Vice President of the China Price Association, observed that despite the effect of lower gasoline price increases, the July CPI still rose 0.5% year-on-year. The core CPI, excluding food and energy, increased 0.9% year-on-year, indicating a generally moderate upward trend in consumer prices. On a month-on-month basis, the CPI fell 0.1%, a narrower decline of 0.2 percentage points compared to the previous month. Xu explained that fluctuations in international crude oil prices drove domestic gasoline prices down 10.7% in July, a drop 5.8 percentage points larger than the previous month, impacting the month-on-month CPI by about 0.35 percentage points. Additionally, an ample supply of seasonal fruits and vegetables led to a 3.8% drop in fresh fruit prices, contributing a 0.07 percentage point decrease to the month-on-month CPI.

Compared to the previous month, July saw positive changes in some domestic markets, with certain sectors showing month-on-month price increases. Hog prices rebounded as the comprehensive policy effect of hog production capacity regulation took hold, combined with factors like extreme weather in some regions pushing up transportation costs. This led to a 4.1% increase in pork prices, shifting from a 0.8% decline the previous month, and boosting the month-on-month CPI by about 0.07 percentage points. Demand for consumer electronics remained strong, with artificial intelligence driving product upgrades and increasing demand and prices. Tablet computers, computers, and mobile phones saw price rises of 11.3%, 5.5%, and 1.0%, respectively, together contributing about 0.03 percentage points to the month-on-month CPI. Service prices also rose, driven by increased summer travel demand, with increases in travel agency fees, hotel accommodation, airfares, and vehicle rental prices. Ongoing policy adjustments in some regions pushed medical service prices up by 1.1%, adding about 0.07 percentage points to the month-on-month CPI.

"The effects of hog production capacity regulation are gradually becoming apparent, international grain prices have upward support, and new drivers like artificial intelligence are releasing demand. Combined with continued implementation of consumption-boosting policies, this will support a continued moderate recovery in CPI," said Liu Fang, a researcher at the National Development and Reform Commission's Market and Price Research Institute.

In July, due to imported and seasonal factors, the PPI fell 0.7% month-on-month and rose 3.5% year-on-year, a 0.6 percentage point slowdown from the previous month. Dong Lijuan noted that the month-on-month PPI decline widened by 0.4 percentage points. This was due to international factors affecting prices of oil and non-ferrous metals, and seasonal factors like high temperatures, rain, and typhoons slowing construction project progress, leading to price declines in some sectors. Additionally, increased hydropower and wind power generation caused price drops of 10.3% and 3.9%, respectively. "However, industrial transformation and upgrading, along with consumption quality improvement, are driving demand and price increases in some sectors. New growth drivers are strengthening, with prices for smart unmanned aerial vehicle manufacturing, carbon new materials, and ship and related equipment manufacturing rising 2.5%, 0.4%, and 0.3% month-on-month, respectively. Quality consumption is growing rapidly, with prices for smart home consumer devices and skincare cosmetics manufacturing rising 3.4% and 0.7% month-on-month," Dong added.

Liu Fang emphasized that China's economy is resilient, with ample supply of livelihood goods. With effective implementation of various stock and incremental policies and increased counter-cyclical adjustments, domestic demand potential is expected to be further released. It is anticipated that price trends in the second half of the year will continue the positive pattern of moderate CPI increases and a stabilizing PPI trend.