Chinese consumer price index inflation grew slightly in June as more government subsidies and some easing trade tensions helped spruce up consumer spending, albeit marginally. 

But producer inflation shrank more than expected, remaining in contraction for 33 consecutive months and also falling at its fastest pace since late-2023. 

CPI grew 0.1% year-on-year in June, government data showed on Wednesday. The print was stronger than expectations for a drop of 0.1% and improved from the 0.1% fall seen in the prior month. 

But CPI still shrank 0.1% month-on-month in June. 

Chinese consumer spending picked up slightly in June amid some e-commerce shopping day events, while Beijing also continued to offer more subsidies for consumer goods such as electronics. 

But the overall trend was still largely deflationary, as Chinese consumers remained wary of economic headwinds from U.S. trade tariffs and slowing domestic production.

Consumer inflation has steadily declined for at least the past two years, with stimulus measures from Beijing offering only limited support. 

China’s factory gate inflation offered an even more dire view on deflation in the country. Producer price index inflation shrank 3.6% y-o-y in June, more than expectations for a drop of 3.2% and worsening from the 3.3% fall seen in the prior month.

PPI inflation shrank for a 33rd consecutive month and was also at its weakest level since July 2023. 

The print showed that Chinese producers were still struggling to drive up prices and spending, with high U.S. trade tariffs presenting added pressure for the sector. Recent purchasing managers index data also showed sustained weakness in Chinese manufacturing activity.