China has published its July inflation figures, which shows a small improvement over the previous month. According to a study released on Wednesday by the National Bureau of Statistics, the Consumer Price Index (CPI) decreased by 0.3% year over year in July but increased by 0.2% when compared to June.

The July year-over-year CPI number exceeded experts’ predictions, who had projected a 0.4% fall. According to verified statistics from Wind Information, this was the first year over year decline since the beginning of 2021.

China Inflation Rate - July 2023 Data - 1986-2022 Historical - August  ForecastThe Producer Price Index (PPI), on the other hand, revealed a 4.4% fall in July compared to the same time in 2016, which was an improvement from June’s 5.4% decline. The year-over-year PPI estimate, however, came in under the 4.1% anticipated in a Reuters survey.

The scenario was described by Zhiwei Zhang, President and Chief Economist of Pinpoint Asset Management, who said that both the CPI and PPI are now in a state of deflation. Zhang emphasized that poor domestic demand is primarily to blame for the slowing economic momentum.

Pork prices, a staple item in China, fell 26% year over year in July, contributing to the CPI’s decrease. In contrast, the cost of travel increased significantly over the prior year by 13.1%.

The Core CPI, which does not include the cost of food or energy, increased by 0.8% from the previous year. According to verified statistics from Wind Information, this amount was the biggest rise since January.

China's Inflation Rate Slows to Zero as Economic Woes Mount - BNN BloombergProducer prices are anticipated to recover on a year-over-year basis before the consumer price index, according to Bruce Pang, Chief Economist and Head of Research for Greater China at JLL. In the following months, he expects that the large base effect and declining pig prices would continue to have an impact on consumer prices, albeit core CPI may gradually increase.

In response to persistent worries about weak consumer demand brought on by the epidemic, China’s central bank has dispelled concerns about deflation and anticipates a rise in consumer prices after a decline in July.

China’s consumer price index is expected to increase by 0.5% this year, according to Oxford Economics, while the production price index is expected to fall by 3.5%. Lead economist at Oxford Economics Louise Loo cited tighter regulations, a correction in the property market, and constrained demand-side stimulation during the epidemic as causes of China’s weak demand in the second quarter.

Despite difficulties, Loo considered the government’ present focused easing policy to be a “positive development” in comparison to broad stimulus efforts.

Related news includes trade statistics from China showing a severe fall in both domestic and foreign demand. Exports fell by 14.5% in July compared to the same month last year, while imports fell by 12.4% in U.S. dollars—worse numbers than anticipated by experts. The downturn in imports was caused by a number of factors, including falling commodity prices. The publication of China’s retail sales, industrial output, and other statistics for July is scheduled for August 15.


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