China witnessed a faster-than-expected rise in consumer prices in July, with the consumer price index (CPI) increasing by 0.5% from a year earlier, exceeding predictions and contrasting with the 0.2% rise in June. The core inflation, excluding food and fuel prices, also saw a slight decrease in July compared to the previous month.
According to the National Bureau of Statistics (NBS), high temperatures and rainfall in certain regions contributed to the increase in food prices, aiding the monthly growth in CPI. However, despite efforts to stimulate consumer spending, weak domestic demand persists due to factors like a sluggish housing market, employment uncertainties, and local government debt burdens hindering significant purchases.
The Chinese government's focus on supporting consumers was highlighted by measures like a national auto trade-in program and eased auto loan regulations, yet car sales continued to decline for the fourth consecutive month in July. Moreover, while Beijing and Shanghai experienced declines in retail sales, reflecting the broader struggles faced by the economy, China's producer price index (PPI) remained in deflation territory. Leaders in China have emphasized the need to target stimulus measures towards consumers to achieve economic growth targets, including pledges to allocate funds for equipment upgrades and consumer goods trade-ins.