Meta Description: China’s CPI rose 0.5% year on year in July 2026, while stable inflation and supportive policies are expected to strengthen domestic consumption in the second half of the year.
China’s consumer prices maintained a moderate pace of growth in July, suggesting that inflation remains under control while leaving policymakers with room to introduce additional measures to support domestic consumption in the second half of the year.
According to data released by the National Bureau of Statistics (NBS), China’s Consumer Price Index (CPI), the country’s main measure of inflation, increased by 0.5% year on year in July. Core CPI, which excludes food and energy prices, rose by 0.9%, indicating that underlying consumer demand remained relatively stable.
NBS statistician Dong Lijuan said the slower headline inflation was mainly due to easing gasoline prices. Gasoline prices rose only 1% year on year in July, with the growth rate falling sharply from the previous month, reducing the contribution of energy prices to overall inflation. Excluding energy products, industrial consumer goods rose 1.5% from a year earlier, while service prices increased 0.7%. Food prices continued to decline, falling 1.5% year on year and helping to keep overall inflation at a moderate level.
On a monthly basis, the CPI edged down by 0.1% in July, mainly because lower international oil prices pushed domestic gasoline prices down by 10.7% compared with June. Meanwhile, service prices rebounded with the arrival of the summer travel season, increasing by 0.4% month on month as demand for tourism and related services strengthened.
Economists believe the current inflation environment provides sufficient policy flexibility to further stimulate consumption. Wang Qing, chief macro analyst at Golden Credit Rating, said stable prices leave room for additional pro-consumption measures and are unlikely to prevent the central bank from adjusting interest rates if necessary.
China’s leadership recently emphasized the need to strengthen macroeconomic policies, accelerate fiscal spending, expand equipment renewal and consumer goods trade-in programs, and improve the supply of high-quality goods and services. Local governments have already responded by broadening subsidy programs. Chongqing has expanded subsidies for home appliances and smart home products, while Hunan Province has added ten new product categories, including smart service robots, smart door locks, smart air purifiers, and smart toilets.
The latest data also showed that China’s Producer Price Index (PPI), which measures factory-gate prices, increased by 3.5% year on year in July. Wen Bin, chief economist at China Minsheng Bank, expects stronger consumption support policies in the coming months, with summer travel and the National Day holiday helping boost spending on tourism, accommodation, and catering services. He also noted that the continued rollout of equipment renewal and trade-in programs is expected to gradually support prices for durable consumer goods such as home appliances and automobiles.
