China Inflation Cools Faster Than Expected on Weak Demand

China’s consumer and producer inflation cooled more than expected in July, highlighting an entrenched economic imbalance driven by persistently sluggish domestic demand.

The consumer price index (CPI) rose 0.5% year-on-year, dipping below 1% for the first time since January, the National Bureau of Statistics said. The producer price index (PPI) increased 3.5%, slowing from June. Both gauges missed market expectations.

The consumer inflation slowdown was primarily driven by plunging gasoline prices. Excluding food and energy, core CPI growth slowed to 0.9%, underscoring a pattern of strong supply and weak demand.