Consumer prices in China rose more slowly than expected in June, while producer prices advanced and neared the highest level in nearly four years. The move comes amid high energy costs and still-contained domestic demand.
The consumer price index (CPI) increased by 1% year over year, below the 1.1% forecast and also lower than the 1.2% recorded in May. The data were released by the National Bureau of Statistics, indicating a loss of momentum in consumption.
Core CPI, which excludes food and energy, also rose by 1% from the prior year, slightly below the previous month’s result. Food prices, meanwhile, fell by 1.6%, easing part of the inflationary pressures and keeping the overall index under control.
By contrast, the producer price index (PPI) rose 4.1% on an annual basis, accelerating from the 3.9% recorded in May. This is the highest growth since July 2022, driven mainly by energy and commodity costs. On a monthly comparison, however, the index fell 0.3%.
“Oil prices are generally on a downward trend, which will prevent the PPI from rising further,” said Tianchen Xu, senior economist at the Economist Intelligence Unit. “Factories cannot fully pass on the cost increases to customers in the supply chain,” he added.
The current performance also reflects a base effect, since in June of last year producer prices had fallen by 3.6%, amid intense price competition in the Chinese economy.
The rebound in the PPI began in March, driven by higher production costs following tensions in the Middle East. In addition, growing demand for technologies related to artificial intelligence helped raise the prices of equipment and semiconductors.
In the industrial sector, manufacturing activity showed expansion above expectations in June, with emphasis on external demand. Products related to artificial intelligence remain one of the main drivers of this advance.
Analysts point out that the Chinese economy remains marked by uneven growth, with strong exports contrasting with weaker domestic consumption and the real estate sector. The cautious behavior of households continues to weigh on demand.
Given this scenario, the expectation is that Chinese authorities will maintain a cautious stance regarding new economic stimulus. The combination of resilient industry and moderate consumption remains a central factor for the coming months.