China’s inflation slowed in July, below forecast

In July, China's inflation slowed down, recording figures below market forecasts. The producer price index increased by 3.5% year-on-year, a drop from 4.1% in June, and even lower than the 3.8% forecast by Bloomberg. This trend was mirrored in the consumer price index, which grew to 0.5% year-on-year, slower than the 0.8% expected by Bloomberg's survey and the lowest rise since January.

Such deceleration in domestic consumption has long been a concern for Beijing, as it may dampen national growth despite the surge in exports and high-tech sectors. Many economists advocate for a growth model driven more by household spending, moving away from the traditional growth drivers like real estate and infrastructure investment.

On a related note, the gauge of China's factory-gate prices showed a slower rise in July, with the producer price index growing by 3.5% year-on-year, down from 4.1% in June and below the 3.8% forecast by Bloomberg. An official meeting of the ruling Communist Party's high-ranking Politburo in late July indicated a shift towards stronger fiscal spending, with a potential boost to domestic demand expected in a few months.

The recent data arrives just two days after trade figures for July revealed a spike in exports and imports, driven by heightened overseas demand for AI-related technology products. The export boom has provided a lifeline to China's expansive manufacturing sector, which has been navigating prolonged domestic spending slump.