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Deflation concerns persist as China’s economy struggles

In June, China experienced its fifth consecutive month of consumer price growth, albeit below expectations, while producer prices continued to decline, indicating persistent deflationary pressures. Despite government efforts to stimulate consumption post-Covid, concerns linger over a sluggish economic recovery marked by a prolonged housing slump and job insecurity. The Consumer Price Index (CPI) rose by 0.2% YoY, slower than in previous months, driven by a notable drop in food prices despite supply disruptions. Meanwhile, the Producer Price Index (PPI) fell by 0.8 percent, indicating ongoing challenges in the manufacturing sector due to excess capacity.

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