China inflation slows to 0.5% in July, below forecast

China's consumer inflation slowed to 0.5% year on year in July, official data showed Sunday, coming in below a 0.8% forecast in a Bloomberg survey.

The National Bureau of Statistics figure was the slowest rise since January. China's producer price index, which measures factory-gate prices, rose 3.5% year on year in July, down from 4.1% in June and below a 3.8% Bloomberg survey forecast.

Weak domestic consumption has weighed on China's economy even as exports and some high-tech sectors have grown. Many economists say China needs to rely more on household spending rather than older growth drivers such as real estate and infrastructure investment.

Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, wrote that economic momentum softened in the second quarter of 2026. He said a late-July meeting of the Communist Party's Politburo signalled stronger fiscal spending, but that more time was needed to judge whether it would lift domestic demand.

The inflation figures came two days after July trade data showed exports and imports rising, helped by overseas demand for AI-related technology products.