China’s producer price index (PPI) fell 3.6% YoY in June, the steepest decline since July 2023, highlighting continued deflationary pressure across the manufacturing sector. The decline exceeded market expectations of a 3.2% drop and reflects the impact of persistent price wars and weak domestic demand. Meanwhile, consumer inflation showed slight improvement. The consumer price index (CPI) rose 0.1% in June from a year earlier, ending four straight months of decline. Core CPI, excluding food and energy, climbed 0.7%, its fastest pace in 14 months, supported in part by government subsidies for appliance and EV trade-ins. Despite the modest rebound in CPI, economists caution that deflation risks remain due to sluggish property sector activity and industrial overcapacity.