China Producer Prices Change

China’s producer prices fell 3.6% year-on-year in July 2025, matching June’s pace and exceeding market expectations for a 3.3% decline. This marked the 34th consecutive month of producer deflation, remaining at the sharpest drop since July 2023, amid persistently shaky domestic demand and a fragile trade truce with the U.S. Production material costs continued to slide (-4.3% vs -4.4% in June), with deeper contractions in mining (-14.0% vs -13.2%), raw materials (-5.4% vs -5.5%), and processing (-3.1% vs -3.2%). Simultaneously, consumer goods prices remained weak (-1.6% vs - 1.4%), weighed down by food (-1.8% vs -2.0%), clothing (-0.1% vs 0.1%), and durable goods (-3.5% vs -2.7%) while prices of daily-use goods rose more slowly (0.6% vs 0.8%). In the first seven months of 2025, factory-gate prices shrank 2.9%. Month-on-month, the PPI declined 0.2%, slowing from a 0.4% fall in the preceding four months and marking the softest pace in five months.