Core Insights - The expansion of domestic demand policies is showing positive effects, with the Consumer Price Index (CPI) rising by 0.4% month-on-month in July, reversing a 0.1% decline in June [1][2] - The Producer Price Index (PPI) decreased by 0.2% month-on-month in July, but the decline is narrowing compared to June, marking the first month of reduced decline since March [1][4] CPI Analysis - The month-on-month increase in CPI was primarily driven by rising prices in services and industrial consumer goods, with service prices up 0.6% and industrial consumer goods prices up 0.5% [2][3] - Key contributors to the service price increase included airfare (up 17.9%), tourism (up 9.1%), hotel accommodation (up 6.9%), and vehicle rental (up 4.4%) [2] - The core CPI, excluding food and energy, rose by 0.8% year-on-year, the highest since March 2024, indicating a continuous upward trend [2][5] PPI Analysis - The narrowing of the PPI decline is attributed to seasonal factors and uncertainties in the international trade environment, affecting prices in certain industries [4][6] - The construction sector faced demand slowdowns due to seasonal weather conditions, while the electricity sector saw reduced demand for coal due to increased hydropower generation [4] - The competitive market environment is improving, with significant reductions in price declines for coal, steel, photovoltaic, cement, and lithium battery industries [4][6] Industry Trends - The transformation and upgrading of traditional industries, along with the rapid growth of emerging industries, are contributing to a year-on-year price recovery in related sectors [5][6] - The implementation of consumption-boosting initiatives is driving healthy development in the consumer market, leading to price increases in sectors such as arts and crafts, sports equipment, and nutritional foods [6][7]

Group 1 - The overall price operation is stabilizing, with macro policies expected to continue supporting domestic demand recovery and price stabilization [2] - Seasonal factors have led to price declines in certain industries, such as a 1.5% decrease in coal mining and washing prices, and a 0.9% decrease in electricity and heat production prices [1] - Experts predict that the "anti-involution" measures will lead to higher industrial product prices in August compared to July, with a significant year-on-year base effect [2] Group 2 - New policies aimed at supporting fertility, free preschool education, and personal consumption loan interest subsidies are expected to effectively stimulate domestic demand and drive prices back to reasonable levels [2] - The National Bureau of Statistics anticipates that consumption demand will be boosted by ongoing policies, leading to a rebound in consumer goods prices [2] - The impact of tailing factors on CPI and PPI is expected to weaken, resulting in a moderate price recovery trend [2]

Group 1: Consumer Price Index (CPI) Insights - In July, the national Consumer Price Index (CPI) increased by 0.4% month-on-month, marking a shift from decline to growth, while year-on-year it remained flat [1][2] - The core CPI, excluding food and energy, rose by 0.8% year-on-year, the highest increase since March 2024, indicating a recovery in market supply and demand relationships due to effective consumption-boosting policies [4][5] - Service prices contributed significantly to the CPI increase, with a month-on-month rise of 0.6%, impacting the CPI by approximately 0.26 percentage points [2][3] Group 2: Producer Price Index (PPI) Insights - The Producer Price Index (PPI) decreased by 0.2% month-on-month, but the decline was less than in June, indicating a potential stabilization in market conditions [5][6] - Year-on-year, the PPI fell by 3.6%, with the decline remaining consistent with June, reflecting improvements in supply-demand relationships in certain industries [5][6] - Factors contributing to the PPI changes include seasonal effects, international trade uncertainties, and ongoing optimization of domestic market competition [5][6] Group 3: Economic Policy and Market Dynamics - Consumption-boosting policies have led to a sustained recovery in demand, with notable impacts on prices of automobiles and home appliances [4][5] - The "anti-involution" trend is reshaping industry supply-demand structures, particularly in sectors with excess capacity, which may enhance overall efficiency and alleviate supply-demand conflicts [6][7] - The long-term sustainability of price recovery remains uncertain and is contingent on the execution and coordination of policies [6][7]

Group 1: Consumer Price Index (CPI) Analysis - In July, the Consumer Price Index (CPI) in Guangdong showed a narrowing year-on-year decline of 0.3%, an improvement of 0.1 percentage points from the previous month [2] - The core CPI, excluding food and energy prices, increased by 0.4% year-on-year, with the growth rate expanding by 0.1 percentage points compared to last month [1] - Month-on-month, the CPI shifted from a decrease of 0.2% in the previous month to an increase of 0.5% in July, driven by a significant rise in non-food prices [3] Group 2: Food and Non-Food Price Trends - Food prices decreased by 1.1% year-on-year, contributing approximately 0.21 percentage points to the CPI decline, with pork prices down 2.4% and egg prices down 4.8% [2] - Non-food prices saw a slight decrease of 0.1% year-on-year, but the decline was less than the previous month, contributing about 0.07 percentage points to the CPI decline [2] - Month-on-month, food prices fell by 0.3%, while non-food prices increased by 0.6%, with significant increases in air ticket prices (up 29.8%) and tourism prices (up 14.7%) due to the summer peak season [3] Group 3: Producer Price Index (PPI) Insights - The Producer Price Index (PPI) experienced a year-on-year decline of 2.0%, with the decline rate widening by 0.2 percentage points from the previous month [4] - In the PPI survey, 38 major industries showed 8 increases and 29 decreases, with an industry increase rate of 21.1%, down 7.8 percentage points from last month [4] - Month-on-month, the PPI decreased by 0.2%, with the decline rate narrowing by 0.1 percentage points, and 11 industries reported price increases [5]

Core Insights - The article highlights the ongoing support of various consumer subsidy policies for durable goods prices, contributing to a sustained increase in core CPI year-on-year, while noting the sluggish recovery in rental and household service prices [1][2]. CPI Analysis - In July, the CPI increased by 0.4% month-on-month, aligning with seasonal trends, while year-on-year figures remained flat. Core CPI rose to 0.8%, the highest since March 2024 [2]. - Key drivers of core CPI include: 1. Strong price increases in consumer policy-supported sectors, with living goods and services prices rising by 0.8% month-on-month, significantly above the seasonal average of 0.26% [2]. 2. Rising gold prices and a surge in consumer gold purchases led to high growth in other goods and services CPI [2]. 3. Summer travel remains robust, although the growth rate of tourism CPI has slightly decreased compared to 2023 and 2024, indicating potential in the tourism and service consumption markets that requires further policy guidance [2]. 4. Rental and household service CPI saw a modest increase of 0.1% month-on-month, which is below historical averages, indicating limited recovery progress [2]. PPI Analysis - In July, the PPI decreased by 0.2% month-on-month and 3.6% year-on-year, with the decline rate remaining stable. The PPI is showing signs of stabilization, supported by raw material prices due to intensified "anti-involution" policies, although downstream factory prices remain weak due to overcapacity and export competition [3]. - The positive impact of "anti-involution" policies on PPI is expected to be gradual and long-term. Current capacity optimization policies have expanded from traditional industries like coal, steel, and cement to emerging sectors such as automotive, photovoltaics, and batteries, affecting nearly 20% of industry revenue [3].

Inflation Data Summary - July CPI year-on-year growth is 0%, exceeding the expected -0.1% and matching the previous month's 0.1%[1] - July CPI month-on-month growth is 0.4%, up from -0.1% in the previous month and down from 0.5% year-on-year[1] - Core CPI year-on-year growth is 0.8%, slightly above the previous value of 0.7%[1] PPI Analysis - July PPI year-on-year decline is -3.6%, worse than the expected -3.4% and unchanged from the previous month[1] - PPI month-on-month change is -0.2%, an improvement from -0.4% in the previous month[1] - The decline in PPI is primarily driven by weak demand, with upstream industry price declines narrowing more significantly[2] Sector Contributions - Service and industrial consumer goods support CPI growth, contributing over 60% to the total CPI increase[2] - Food prices decreased by 0.2%, underperforming compared to the seasonal average decline of 0.7%[2] - Upstream industries like coal mining and black metal smelting show reduced price declines, indicating some recovery in these sectors[3] Future Outlook - To achieve a positive year-on-year PPI by year-end, the average month-on-month growth over the next five months needs to reach at least 0.42%[3] - The "anti-involution" policy effects are beginning to show, but full transmission may take time[3] - The current inflation data suggests a moderate environment, supporting a loose monetary policy stance[3]

Inflation Data Summary - In July 2025, the CPI year-on-year remained at 0.0%, down from 0.1% in June, while the month-on-month increased by 0.4% compared to a previous decrease of -0.1%[2] - The PPI year-on-year remained at -3.6%, with a month-on-month decrease of -0.2%, an improvement from -0.4% in June[2] CPI Analysis - The core CPI year-on-year rose to 0.8%, the highest since March 2024, driven by a 0.6% increase in service prices[2] - Food prices showed significant weakness, with a month-on-month decrease of -0.2%, below the 5-year average of 1.1%[2] - Non-food prices increased by 0.3% year-on-year, up from 0.1% in June, with travel services and certain consumer goods contributing to this rise[2] PPI Insights - The month-on-month decline in PPI narrowed to -0.2%, the smallest drop since March 2025, indicating a potential stabilization in upstream prices[2] - The decrease in production materials was -0.2%, a reduction of 0.4 percentage points from the previous month, influenced by "anti-involution" policies[2] Risks and Future Outlook - Key risks include potential delays in domestic policy implementation, unexpected declines in real estate investment, and inflation in the U.S. exceeding expectations[2]

Core Insights - The July PPI improved on a month-on-month basis but remained unchanged year-on-year at -3.6%, slightly below market expectations, indicating a disconnect in price transmission from upstream raw materials to downstream industries [1][2] - The "anti-involution" policy has led to significant price increases in key commodities such as coal, steel, and lithium, but these increases have not effectively translated into higher industrial product prices [2][3] - The ongoing "pig cycle misalignment" has resulted in CPI slightly exceeding market expectations, driven by unexpected price increases in core goods, energy, and other services [5][6] PPI Analysis - The month-on-month PPI improved due to rising commodity prices, but the year-on-year figure did not show improvement, highlighting weak downstream demand and limited pricing power for enterprises [1][3] - The analysis framework indicates that while upstream raw material prices have improved, the PPI for downstream industries has continued to decline, particularly in the export chain [4] - The dual impact of supply-side policies and demand-side pressures is evident, with the export chain facing significant downward pressure [4] CPI Insights - The CPI for July was reported at 0.0% year-on-year, slightly above the expected -0.1%, driven by durable goods benefiting from trade-in subsidies and rising energy prices [5][6] - The increase in CPI was significantly influenced by the price hikes in gold and platinum jewelry, contributing approximately 0.22 percentage points to the overall CPI [5] - Expectations for CPI improvement are projected for September, considering the ongoing misalignment in the pig cycle and slow recovery in consumer spending [6] Market Implications - The bond market may experience low volatility as CPI and PPI figures align closely with market expectations, with a focus on inflation recovery and potential demand-side policies [7] - The overall economic environment remains sensitive to both domestic policy effectiveness and international trade dynamics, which could influence future market performance [7]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - Current price data remains weak, and domestic demand recovery is limited after excluding seasonal summer effects. The increase in July's core CPI is mainly supported by the summer travel boom and high gold prices. The divergence between PPI production and living materials shows that the policy effects of the national unified market construction are concentrated in upstream industries, and the ineffective recovery of domestic demand restricts PPI's year - on - year recovery. The sustainability of the industrial price increase and its price transmission to downstream industries depend on the improvement of terminal demand. Given the uncertainty in the trade environment, a loose monetary environment is needed to stabilize domestic demand [4][29]. - After the implementation of the VAT policy, the bond market adjustment is limited. With relatively loose funds, the central bank's net injection of 300 billion yuan in 3 - month repurchase agreements on the 8th may help the market recovery. The first - stage interest rate will return to the pre - adjustment level. Whether it can break through the previous low depends on other market performances and fundamental pressures. The recent rise in commodities and the stock market is mainly based on expectations, and the unchanged year - on - year decline in July's PPI indicates slowing demand. For the bond market, the overall pattern of asset shortage remains unchanged. It is expected that the yields of 10 - year and 30 - year treasury bonds may return to around 1.65% and 1.85% in the short term, and may break through the previous low if other markets rise moderately and demand continues to slow [5][30]. Summary by Related Catalogs CPI Analysis - **Overall CPI Situation**: In July, CPI continued to be low, with the year - on - year growth rate slowing down by 0.1 percentage points to 0%. The month - on - month growth rate was 0.4%, an increase of 0.5 percentage points from the previous month. Core CPI increased by 0.8% year - on - year, an increase of 0.1 percentage points from the previous month, and 0.4% month - on - month. The growth of core CPI was mainly due to the summer travel demand and high gold prices. After excluding the "other goods and services" item affected by gold prices, the overall price level was still weak [1][2]. - **Non - food CPI**: In July, non - food CPI increased by 0.3% year - on - year, an increase of 0.2 percentage points from the previous month, and 0.5% month - on - month. The rise in summer service prices was the main reason, with service prices increasing by 0.6% month - on - month, contributing more than 60% to the CPI increase [2]. - **Food CPI**: In July, food CPI decreased by 1.6% year - on - year, with the decline expanding by 1.3 percentage points from the previous month, and decreased by 0.2% month - on - month, with the decline narrowing by 0.2 percentage points. The year - on - year decline in pork prices was the main reason for the expanding decline in food CPI. Affected by high - temperature and rainy weather, the prices of fresh vegetables and aquatic products increased month - on - month [13]. PPI Analysis - **Overall PPI Situation**: In July, PPI showed a lagging performance, with a year - on - year decline of 3.6%, the same as the previous month. The decline in the year - on - year and month - on - month production materials PPI narrowed slightly. The prices of most domestic manufacturing raw materials decreased month - on - month, mainly affected by seasonal factors and international trade uncertainties. The prices of industries with high export proportions were under increasing downward pressure, but the month - on - month decline in many industries' prices converged under the influence of the national unified market construction [1][3][23]. - **Production and Living Materials PPI**: In July, the production materials PPI decreased by 4.3% year - on - year, with the decline narrowing by 0.1 percentage points from the previous month, and decreased by 0.2% month - on - month, with the decline narrowing by 0.4 percentage points. The living materials PPI decreased by 1.6% year - on - year, with the decline expanding by 0.2 percentage points from the previous month [23][24]. Bond Market Analysis - After the implementation of the VAT policy, the bond market adjustment was limited. With relatively loose funds, the central bank's net injection of 300 billion yuan in 3 - month repurchase agreements on the 8th may help the market recovery. The first - stage interest rate will return to the pre - adjustment level. The recent rise in commodities and the stock market was mainly based on expectations, and the unchanged year - on - year decline in July's PPI indicated slowing demand. For the bond market, the overall pattern of asset shortage remained unchanged. It is expected that the yields of 10 - year and 30 - year treasury bonds may return to around 1.65% and 1.85% in the short term, and may break through the previous low if other markets rise moderately and demand continues to slow [5][30].

Report Industry Investment Rating - Not provided Core Viewpoints - Not provided Summary by Related Catalogs 1. Futures Data - **Futures Settlement Prices and Weekly Changes**: 10 - year Treasury bond futures T2509.CFE settled at 108.61 with a 0.15% weekly increase, T2512.CFE at 108.505 with a 0.07% increase; 5 - year Treasury bond futures TF2509.CFE at 105.82 with a 0.09% increase, TF2512.CFE at 105.875 with a 0.09% increase; 2 - year Treasury bond futures TS2509.CFE at 102.37 with a 0.02% increase, TS2512.CFE at 102.436 with a 0.04% increase; 30 - year Treasury bond futures TL2509.CFE at 119.25 with a 0.13% increase, TL2512.CFE at 118.880 with a 0.05% increase [7] - **Spread Data**: The T2509 - T2512 inter - term spread was 0.105 with a weekly decline of 0.523; TF2509 - TF2512 was - 0.055 with a decline of 12.000; TS2509 - TS2512 was - 0.066 with an increase of 7.250. The 2TS - T cross - variety spread was 300.870 with a decline of 0.088; 2TF - T was 103.030 with an increase of 0.020; TS - TF was 98.920 with a decline of 0.054 [7] - **Spot Bond Yields**: The 1Y Treasury bond yield was 1.35% with a weekly decline of 1.99 BP; 2Y was 1.40% with a decline of 2.69 BP; 3Y was 1.42% with a decline of 2.86 BP; 5Y was 1.54% with a decline of 2.39 BP; 7Y was 1.65% with a decline of 1.67 BP; 10Y was 1.69% with a decline of 1.88 BP; 30Y was 1.96% with an increase of 0.90 BP. The 1Y China Development Bank bond yield was 1.50% with an increase of 0.04 BP; 3Y was 1.63% with a decline of 0.99 BP; 5Y was 1.66% with a decline of 0.62 BP; 7Y was 1.79% with a decline of 0.01 BP; 10Y was 1.78% with an increase of 1.59 BP; 30Y was 2.05% with an increase of 0.16 BP [7] - **Funding Rates**: The DR001 inter - bank pledged repo rate was 1.31% with a weekly decline of 0.23 BP; DR007 was 1.43% with an increase of 0.09 BP; DR014 was 1.47% with a decline of 6.13 BP. The SHIBOR1M rate was 1.53% with a decline of 2.34 BP; SHIBOR3N was 1.55% with a decline of 0.86 BP [7] 2. CPI and PPI Data - **CPI Data**: The CPI in July was 0.4%, up 0.5 pct compared to the previous period, and the CPI in February 2024 was 0.8%, up 0.4 pct compared to the previous period. There were also various historical CPI data comparisons [21] - **PPI Data**: The PPI had changes such as a 0.4 pct change to - 0.2%, a 1 pct change to - 0.2 pct, etc [24]