Key Points: ● Base effects cause CPI growth rate to decline slightly ● "Anti-involution" combined with base effects leads PPI growth rate to bottom out and rebound ● Insufficient demand issues still require attention, future price performance may improve

Summary: In August 2025, CPI grew -0.4% year-over-year, down 0.4 percentage points from the previous month; month-over-month growth was 0.0%, down 0.4 percentage points from the previous month. High base effects in food items caused CPI growth rate to decline slightly this month. Affected by abundant supply, CPI growth continues at low levels, but this month shows obvious high base effects. "Anti-involution" effects are gradually emerging, oversupply issues in some consumer industrial goods may be alleviated, industrial consumer goods price growth rates rose slightly. Combined with offsetting high base effects in food items, CPI grew -0.4% year-over-year this month.

In August 2025, PPI fell 2.9% year-over-year, with the decline narrowing by 0.7 percentage points from the previous month; month-over-month growth was 0.0%, up 0.2 percentage points from the previous month. External environmental uncertainties, "anti-involution" optimizing domestic market competition order combined with low base effects led PPI growth rate to bottom out and rebound.

Main Text:

Base Effects Lead to Slight CPI Growth Decline In August 2025, CPI grew -0.4% year-over-year, down 0.4 percentage points from the previous month; month-over-month growth was 0.0%, down 0.4 percentage points from the previous month. High base effects in food items caused CPI growth rate to decline slightly this month. On one hand, affected by abundant supply, CPI growth continues at low levels, but this month shows obvious high base effects; on the other hand, "anti-involution" effects are gradually emerging, oversupply issues in some consumer industrial goods may be alleviated, with industrial consumer goods price growth rates generally rising slightly. Therefore, combined with offsetting high base effects in food prices, CPI grew -0.4% year-over-year this month.

Core CPI year-over-year growth rate, excluding food and energy prices, has shown fluctuating upward trend since February. August core CPI grew 0.9% year-over-year, up 0.1 percentage points from August; January-August core CPI grew 0.5%, up 0.2 percentage points from the first quarter.

In food items, from a year-over-year perspective, food prices grew -4.3%, down 2.7 percentage points from the previous month. Food supply is abundant, combined with high base effects, food prices continue declining year-over-year. In August 2024, extreme rainfall weather caused fruit, vegetable, meat and egg prices to rise significantly, creating high base effects for this month. Overall, prices in eight major food categories showed divergence year-over-year (1 up, 7 down, 0 flat), with fresh vegetables showing the largest year-over-year decline (-15.2%); compared to the previous month's year-over-year changes showed divergence (1 positive, 7 negative, 0 unchanged), with fresh vegetables showing the most significant year-over-year change (-7.6%).

From a month-over-month perspective, food prices grew 0.5% month-over-month, up 0.7 percentage points from the previous month. Affected by seasonal factors, extreme rainy weather remained frequent in August, causing fresh vegetable prices to rise significantly; additionally, egg prices showed seasonal increases in August; in August, as high temperature weather gradually subsided, meat consumption gradually recovered, with beef and mutton prices rising seasonally. Overall, prices in eight major food categories showed mixed month-over-month performance (3 up, 4 down, 1 flat), with fresh vegetables showing the highest month-over-month increase (8.5%), and month-over-month changes compared to the previous month showed divergence (5 positive, 2 negative, 1 unchanged), with fresh vegetables showing the largest month-over-month change (7.2%).

Non-food prices grew 0.5% year-over-year, up 0.2 percentage points from the previous month. Non-food prices continue slight year-over-year increases, but overall remain in the bottom range. Household appliances and transportation fuel prices continuing to rise significantly year-over-year are the main driving factors. Contrary to the same period in 2024, non-food price growth rate exceeding CPI growth rate is the main factor restraining CPI growth rate decline, indirectly reflecting the manifestation of "anti-involution" effects. This month service prices grew 0.6% year-over-year, up 0.1 percentage points from the previous month. Overall, prices in seven major non-food categories generally rose year-over-year (6 up, 1 down, 0 flat), with other goods and services prices showing the largest year-over-year increase (8.6%), and month-over-month changes showed divergence (6 positive, 0 negative, 1 unchanged), with transportation and communication prices showing the most obvious year-over-year change (0.7%).

From a month-over-month perspective, non-food prices grew -0.1% month-over-month, down 0.6 percentage points from the previous month, mainly driven by increases in household appliances, transportation fuel, and tourism prices. Summer tourism peak season drove tourism prices to rise seasonally, affected by energy price fluctuations, transportation fuel prices rose 3.0% this month. Driven by housing and energy price increases, non-food prices stopped declining. On one hand, as summer entered the latter half, travel and tourism decreased compared to July, tourism prices declined seasonally, growing -0.6% month-over-month, down 9.7 percentage points from the previous month; on the other hand, affected by international crude oil price fluctuations, transportation fuel prices fell 0.9% month-over-month this month, down 4.4 percentage points from the previous month. Overall, prices in seven major non-food categories showed month-over-month divergence (1 positive, 4 negative, 1 flat), with transportation and communication, healthcare prices showing the highest month-over-month rates (-0.3%, 0.3%), and month-over-month changes compared to the previous month showed divergence (1 positive, 6 negative, 0 unchanged), with transportation and communication prices showing the most significant month-over-month change (-1.8%).

"Anti-involution" Combined with Base Effects, PPI Growth Rate Bottoms Out and Rebounds In August 2025, PPI fell 2.9% year-over-year, with the decline narrowing by 0.7 percentage points from the previous month; month-over-month growth was 0.0%, up 0.2 percentage points from the previous month. External environmental uncertainties, "anti-involution" optimizing domestic market competition order combined with low base effects led PPI growth rate to bottom out and rebound.

Impacted by high US tariffs, global trade contracted periodically, economic growth slowed, total demand contracted, industrial production declined periodically, international commodity prices fell, and domestic industrial goods prices declined due to imported transmission effects. In August, international commodity prices fell, affecting domestic coal mining and washing, oil and natural gas extraction industry prices to decline 19.8% and 9.7% year-over-year respectively; affected by trade uncertainties, computer communication and other electronic equipment manufacturing industry prices, which have relatively high export ratios, fell 2.4% year-over-year.

Additionally, China remains in an economic structural adjustment period, combined with domestic high temperature and rainy weather. On one hand, real estate market capacity removal continues, combined with high temperature and rainy weather, enterprises reduced operations, affecting steel, coal and other commodity demand to contract relatively, making it difficult for commodity prices to sustain significant increases; on the other hand, while traditional capacity is being removed, high-tech industries are developing rapidly, causing opposite price trends for non-ferrous and ferrous metals. In August, ferrous metal smelting and processing industry prices fell 4.0% year-over-year, while non-ferrous metal smelting and processing industry prices rose 4.8% year-over-year, reflecting the divergence between traditional and high-tech industries.

From a year-over-year perspective, PPI fell 2.9% in August, with the decline narrowing by 0.7 percentage points from the previous month. Affected by low base effects, declining international commodity prices' imported effects and high temperature rainy weather impacts, combined with "anti-involution" domestic optimization of market competition order offsetting effects, industrial goods price growth rate bottomed out and rebounded this month. Producer goods prices fell 3.2% year-over-year, with the decline narrowing by 1.1 percentage points from the previous month, with mining, raw materials, and processing industry prices year-over-year growth rates rising by 2.5, 1.3, and 0.9 percentage points respectively; consumer goods prices fell 1.7% year-over-year, with the decline expanding by 0.1 percentage points from the previous month, with durable consumer goods prices falling 3.7% year-over-year, with the decline expanding by 0.2 percentage points.

From a month-over-month perspective, PPI grew -0.2% month-over-month in July, with the decline remaining flat from the previous month. Tightening external environment combined with economic structural adjustment, producer goods prices grew -0.6% month-over-month, with the decline narrowing by 0.2 percentage points from the previous month, with durable goods prices showing the most obvious month-over-month fluctuation. Affected by unstable foreign trade expectations, consumer goods prices grew -0.2% month-over-month, down 0.1 percentage points from the previous month, with food prices unchanged; clothing, general daily goods prices, and durable goods prices all showing negative month-over-month growth.

Insufficient Demand Issues Still Require Attention, Future Price Performance May Improve Regarding CPI, affected by "stable growth, promote consumption" policies, combined with 2024's low base effects, may drive 2025 CPI growth rate upward. However, the tightening external international environment remains unchanged, insufficient domestic economic endogenous momentum, domestic economic pressure remains significant, employment and income expectations have not changed obviously, insufficient effective demand from residents constrains, making it difficult for future consumer prices to rise rapidly and significantly. 2025 CPI growth rate may rise slightly but remain at historically relatively low levels.

Regarding PPI, although China's domestic economic pressure persists, enterprises lack endogenous momentum, effective industrial demand needs stimulation, real estate market capacity removal continues, economic structural adjustment continues, PPI downward pressure remains. However, policy adjustments, "legally and regulatory governance of enterprises' low-price disorderly competition" may become the direct driving force for PPI growth rate to rise, and PPI growth rate in the second half of 2025 may rise significantly.

About Beijing University National Economic Research Center: Beijing University National Economic Research Center was established in 2004, affiliated with Beijing University School of Economics. Relying on Beijing University, key research areas include Chinese economic fluctuation and economic growth, macroeconomic control theory and practice, economic theory, Chinese economic reform practice, transition economy theory and practice frontier topics, political economy, Western economics teaching and research. Meanwhile, the center closely tracks major changes in macroeconomic and policy developments, incorporating short-term fluctuations and long-term growth into a comprehensive theoretical research framework, using unique observation perspectives to interpret, grasp macroeconomic trends, analyze data changes, understand policy intentions, and predict policy effects.

The center's research has achieved significant results and has had considerable influence on China's macroeconomic policies. The most representative achievements include: (1) Promoting adjustment of China's population policy. Center Director Professor Su Jian has been calling for China to immediately abandon family planning policies and encourage childbirth since 2006. (2) Research on macroeconomic control systems: The center proposed a three-dimensional macroeconomic control system including market-oriented reforms, supply management and demand management policies. (3) Research on macroeconomic control intensity: In July 2017, the center pointed out that China's macroeconomic control should strictly prevent excessive force, this suggestion received instructions from State Council main leadership and was completely consistent with the "moderate macroeconomic control" viewpoint proposed in the 19th Party Congress report three months later. (4) Achievements regarding China's economic target growth rate. In 2013, Liu Wei and Su Jian, through careful analysis and calculation, believed that China only needs 6.5% economic growth rate annually to ensure employment. Shortly thereafter, this growth rate became the benchmark target for Chinese government economic growth rate. China's economic practice in recent years has also proven the accuracy of their calculation results. (5) Supply-side research. Professors Liu Wei and Su Jian are among the earliest domestic scholars researching supply-side, they began publishing academic papers on supply management in journals like "Economic Research" in 2007. (6) New normal research. The collaborative paper by Liu Wei and Su Jian "China's Macroeconomic Control Under the New Normal" (Economic Science Issue 4, 2014) was the first academic paper studying China's economic new normal. Su Jian and Lin Weibin also studied developed countries' new normal. (7) "Seeking Breakthrough in Chinese Economy" edited by Liu Wei and Su Jian has been translated into English, Korean, Russian, Japanese, and Hindi and published in 5 languages. (8) Beijing subway subsidy mechanism research. In 2008, this research group was commissioned by Beijing Municipal Finance Bureau to design Beijing's subway operation subsidy mechanism. This mechanism has been used since January 1, 2009, until now.

Center publications include: (1) "Yuan Fu" magazine. "Yuan Fu" is a monthly electronic publication hosted by Beijing University National Economic Research Center, aiming to present major domestic and international macroeconomic events in the most timely, professional, and comprehensive manner and provide professional interpretation of key events. (2) "China Economic Growth Report" (annual report). This report mainly analyzes medium and long-term problems in China's economic operation, has been continuously published for 14 issues since 2003, is the longest continuously published among related annual reports, and is included in the Ministry of Education's annual report support plan. (3) Series of macroeconomic operation analysis and forecast reports. The center regularly publishes series of analysis and forecast reports on China's macroeconomic operation, especially the center's forecast reports are in leading positions nationally in terms of forecasting accuracy.

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