China producer inflation slows to three-month low, consumer prices cool

Beijing: ​China's producer price inflation eased more than ​expected in July, slowing to its weakest in three months, while consumer inflation also cooled, official data showed on Sunday, ‌as global ⁠energy ⁠prices retreated despite the U.S.-Iran war.

China's leaders, confronting a two-speed ​economy of strong factory output and exports but weak domestic demand, ​have pledged to bolster growth by accelerating fiscal spending on already budgeted infrastructure projects through year-end.

Also Read: China's factory inflation hits 3-year high as energy costs surge


Consumer and producer inflation "weakened in July. This ⁠is consistent with ‌other activity data such as the PMI index, which also dropped more than expected," ⁠said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"The economic momentum softened in Q2. The ​Politburo in July signalled stronger fiscal spending as the policy response. The transmission of the fiscal spending will take time."

Also Read: China's April producer inflation at 45-month peak on energy price shock

The producer price index rose 3.5% from a year earlier in July, National ‌Bureau of Statistics data showed, easing from 4.1% in June to its lowest in ​three months. ​It was ⁠below economists' expectations for a 3.8% increase in a Reuters poll.

Although some of China's upstream and high-tech sectors ​have maintained strong profit growth, more domestic market-facing manufacturers struggled against sluggish demand as overall economic growth lost steam. Rising input costs risk further squeezing their profit margins and dampening confidence.