On August 9th, the National Bureau of Statistics released the latest price data for July. The Consumer Price Index (CPI) rose 0.5% year-on-year but fell 0.1% month-on-month. Meanwhile, the Producer Price Index (PPI) for industrial products increased by 3.5% year-on-year and decreased 0.7% month-on-month. This data provides a snapshot for understanding the current state of price movement.

The data shows that the year-on-year increase in CPI for July was 0.5 percentage points lower than the previous month, marking the first time it has dropped below 1% since February. Dong Lijuan, Chief Statistician at the National Bureau of Statistics, attributed this moderation primarily to a slower rise in gasoline prices. Due to international factors, the growth rate of gasoline prices in July fell by 16 percentage points compared to June, reducing its upward pull on the CPI by about 0.45 percentage points and causing the energy price increase to slow to 0.6%. Xu Guangjian, Vice President of the China Price Association, noted that despite the impact of slower gasoline price increases, the CPI still rose 0.5% year-on-year in July. The core CPI, which excludes food and energy prices, rose 0.9% year-on-year, indicating that consumer prices are generally maintaining a mild upward trend.

On a month-on-month basis, the CPI fell 0.1%, narrowing the decline by 0.2 percentage points from the previous month. Xu Guangjian explained that in July, fluctuations in international crude oil prices led to a 10.7% month-on-month drop in domestic gasoline prices, a significant expansion from the 5.8% decline in the prior month, which dragged the CPI down by approximately 0.35 percentage points. Additionally, as seasonal fruits and vegetables entered the market in large quantities, supply was ample, causing fresh fruit prices to fall 3.8% month-on-month, which reduced the CPI by about 0.07 percentage points. However, compared to the previous month, some domestic industries showed positive changes in July, with prices rising on a month-on-month basis. Pork prices rebounded as the effects of comprehensive production capacity regulation policies for live pigs became evident, combined with factors such as extreme weather events like high temperatures and heavy rains in some regions that pushed up transportation costs. This led to pork prices turning from a 0.8% decline in June to a 4.1% increase in July, contributing 0.07 percentage points to the month-on-month CPI rise. There was also strong demand for consumer electronics, driven by artificial intelligence, which spurred product upgrades. As a result, prices for tablets, computers, and mobile phones rose by 11.3%, 5.5%, and 1.0%, respectively, adding 0.03 percentage points to the month-on-month CPI increase. Service prices also rose due to increased travel demand during the summer vacation. Prices for travel agency services, hotel accommodation, airfares, and vehicle rentals all climbed. Furthermore, ongoing policy-driven price adjustments in some regions pushed up medical service prices by 1.1%, contributing 0.07 percentage points to the month-on-month CPI increase. Liu Fang, a researcher at the Market and Price Research Institute of the National Development and Reform Commission, believes that the gradually effective regulation of pig production capacity, the upward support for international grain prices, the release of new demand from sources like artificial intelligence, and the continued implementation of consumption-stimulating policies will all provide support for a continued moderate recovery in the CPI.

In July, due to imported and seasonal factors, the PPI fell 0.7% month-on-month, while its year-on-year increase moderated to 3.5%, down 0.6 percentage points from June. Dong Lijuan indicated that the month-on-month PPI decline widened by 0.4 percentage points from the previous month. This was due to two main factors. First, imported factors led to price declines in industries related to petroleum and non-ferrous metals. Second, seasonal factors played a role. With more frequent high temperatures, rain, and typhoons in July, the pace of construction projects slowed, causing price drops in some related industries. At the same time, increased hydropower and wind power generation led to price declines of 10.3% and 3.9%, respectively. "However, it is also important to see that industrial transformation, upgrades, and the expansion of quality consumption are driving increased demand and price rises in some sectors," Dong Lijuan added. As new growth drivers strengthen, prices for intelligent unmanned aerial vehicle manufacturing, carbon new materials, and ship and related device manufacturing rose by 2.5%, 0.4%, and 0.3% month-on-month, respectively. Consumption of quality goods grew rapidly, with prices for smart home consumer devices and skincare cosmetics manufacturing increasing by 3.4% and 0.7% month-on-month. Liu Fang concluded that China's economy is resilient, with ample supply of livelihood goods. Against the backdrop of fully leveraging various existing and incremental policies and increasing 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 a moderate CPI rise and a stabilizing PPI growth trend.