In July, the Consumer Price Index (CPI) rose by 0.5% year-on-year and fell by 0.1% month-on-month, while the Producer Price Index (PPI) increased by 3.5% year-on-year and dropped by 0.7% month-on-month. The National Bureau of Statistics released the latest price data on the 9th, offering insights into the current state of price movements.

Statistical data shows that July's CPI year-on-year increase was 0.5 percentage points lower than the previous month, marking the first time it has fallen below 1% since February of this year. "The slowdown in the CPI year-on-year rise is mainly due to a narrower increase in gasoline prices," said Dong Lijuan, Chief Statistician of the Urban Department at the National Bureau of Statistics. Dong explained that, influenced by international factors, July's gasoline price increase was 16 percentage points lower than the previous month, reducing its upward pull on the CPI by about 0.45 percentage points and causing energy price growth to slow to 0.6%.

Xu Guangjian, Vice President of the China Price Association, noted that despite the impact of reduced gasoline price growth, the CPI still rose by 0.5% year-on-year in July. The core CPI, excluding food and energy prices, increased by 0.9% year-on-year, indicating that consumer prices are maintaining a generally moderate upward trend. On a monthly basis, the CPI fell by 0.1%, a narrowing of 0.2 percentage points from the previous month. Xu analyzed that in July, fluctuations in international crude oil prices led to a 10.7% drop in domestic gasoline prices, a decline that expanded by 5.8 percentage points from June, affecting the month-on-month CPI by about -0.35 percentage points. Additionally, ample supply of seasonal fruits and vegetables drove a 3.8% drop in fresh fruit prices, contributing to a 0.07 percentage point reduction in the month-on-month CPI.

Compared to the previous month, some domestic industries showed positive price changes in July, with several sectors experiencing month-on-month increases. Pork prices rebounded: the effects of comprehensive production capacity control policies, combined with extreme weather events like high temperatures and heavy rainfall in some regions that raised transportation costs, caused pork prices to shift from a 0.8% decline in June to a 4.1% increase in July, contributing about 0.07 percentage points to the month-on-month CPI rise. Consumer electronics demand remained strong: artificial intelligence is driving the iterative upgrade of consumer electronics, leading to increased demand and higher prices. Prices for tablets, computers, and mobile phones rose by 11.3%, 5.5%, and 1.0%, respectively, together contributing about 0.03 percentage points to the month-on-month CPI increase. Service prices also rose: with increased travel demand during the summer holidays, prices for travel agency fees, hotel accommodation, airfares, and vehicle rental services all increased. Additionally, ongoing policy-driven price adjustments in some regions led to a 1.1% rise in medical service prices, contributing about 0.07 percentage points to the month-on-month CPI increase.

"The gradual effectiveness of pork production capacity controls, upward support for international grain prices, the release of demand from new drivers like artificial intelligence, and the continued implementation of consumption-promoting policies will all provide support for a continued moderate recovery in the CPI," said Liu Fang, a researcher at the Market and Price Research Institute of the National Development and Reform Commission.

In July, influenced by imported and seasonal factors, the Producer Price Index (PPI) fell by 0.7% month-on-month and rose by 3.5% year-on-year, a 0.6 percentage point slowdown from the previous month. Dong Lijuan stated that the 0.4 percentage point expansion in the month-on-month PPI decline was due to two factors: first, international factors caused price declines in oil, non-ferrous metals, and related industries; second, seasonal factors such as high temperatures, heavy rainfall, and typhoons in July slowed construction project progress, leading to price declines in some industries. At the same time, increased hydropower and wind power generation led to price drops of 10.3% and 3.9%, respectively. "However, we should also note that industrial transformation, upgrading, and quality consumption expansion are driving up demand and prices in some industries. New growth drivers are strengthening, with prices for smart unmanned aerial vehicle manufacturing, carbon-based new materials, and ship and related device manufacturing rising by 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 increasing by 3.4% and 0.7% month-on-month," Dong added.

Liu Fang commented that China's economy has strong resilience, and the supply of essential goods is ample. Against the backdrop of effectively 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.