Group 1: CPI Analysis - In June, the CPI increased by 0.1% year-on-year, turning positive from negative; month-on-month, it decreased by 0.1%, with the decline narrowing[5] - Food CPI continued its downward trend, recording -0.3% year-on-year, primarily due to pork prices dropping by 8.5%, a decrease of 11.6 percentage points from the previous month[5] - Core CPI reached 0.7% year-on-year, the highest in 14 months, supported by consumption policies and a significant increase in e-commerce sales during the "618" shopping festival, which totaled 855.6 billion yuan, up 15.2% year-on-year[5] Group 2: PPI Analysis - In May, the PPI decreased by 3.6% year-on-year and 0.4% month-on-month, with production material prices down by 4.4%[10] - The decline in PPI was exacerbated by weak demand in the real estate sector and a high base effect from the previous year, with June's PPI drop expanding by 0.3 percentage points, nearing its lowest point of the year[10] - The PPI for June is expected to remain around -3%, influenced by seasonal production slowdowns and recent declines in international oil prices[16] Group 3: Future Outlook - For July, CPI is projected to remain around 0.1%, with food and energy prices continuing to exert downward pressure, while core CPI provides some support[15] - PPI is also expected to stay low, around -3%, due to seasonal factors and ongoing adjustments in the real estate market, although regulatory measures may provide some price support in key industries[16] - The overall price levels are anticipated to continue fluctuating at low levels, with limited upward momentum due to weak demand and high base effects from the previous year[15]

Group 1: PPI Trends - In June, the PPI decline expanded to 3.6%, a decrease of 0.3 percentage points from May, marking the lowest level since July 2023[6] - The decline in PPI is primarily driven by the midstream sector, with midstream raw material processing PPI dropping to -5.9% year-on-year, contributing approximately 0.3 percentage points to the overall decline[10] - The capacity utilization rate in the raw material processing industry was significantly below the historical 50th percentile in Q1 2025, indicating potential overcapacity in the sector[10] Group 2: CPI Recovery - In June, the CPI unexpectedly turned positive, rising by 0.1% year-on-year, with both food and non-food CPI increasing by 0.1 percentage points[16] - The core CPI also saw a year-on-year increase, reaching 0.7%, the highest in 14 months, driven mainly by a recovery in consumer goods prices[16] - The recovery in CPI is attributed to three factors: a seasonal rise in vegetable prices, reduced energy drag from international oil prices, and a rebound in industrial consumer goods prices[20] Group 3: Risks and Outlook - Geopolitical risks and unexpected increases in international oil prices are significant risk factors that could impact future economic conditions[23] - Despite the CPI's recovery, there remains a risk of a phase-down if short-term factors dissipate, indicating that further support for CPI is needed[21]

Inflation Data - June CPI year-on-year growth rate is 0.1%, an improvement from the previous value of -0.1%, exceeding market expectations of 0%[3] - June PPI year-on-year growth rate recorded at -3.6%, lower than market expectations of -3.2%[7] - Core CPI, excluding food and energy, increased by 0.7% year-on-year, marking a 14-month high[5] Price Movements - Industrial consumer goods prices saw a narrowing decline from -1.0% in May to -0.5% in June, contributing less to CPI decline by approximately 0.18 percentage points[3] - Gasoline prices shifted from a 3.8% decline to a 0.4% increase in June, influenced by international oil price movements[4] - Platinum jewelry prices surged by 12.6% in June, the largest monthly increase in nearly a decade[3] Economic Outlook - The market is expected to exhibit a dual bull structure in stocks and bonds in the second half of the year, supported by improving US-China trade relations and risk-averse funds[2] - Fixed income yields, particularly the 10-year government bond rate, are projected to decline to around 1.5% amid low domestic demand stimulus probability[2] Consumer Demand - Consumer demand is in a critical recovery phase, with incremental counter-cyclical policies expected to enhance demand and gradually improve CPI levels[7] - The demand for high-quality living is increasing, leading to price recoveries in related industries[9]

CPI Analysis - In June, the CPI decreased by 0.1% month-on-month and increased by 0.1% year-on-year, slightly above the previous values of -0.2% and -0.1% respectively[1] - The core CPI remained flat month-on-month and rose to 0.7% year-on-year, an increase of 0.1 percentage points from the previous month[1] - Food prices fell by 0.4% month-on-month, while non-food prices remained stable[1] PPI Analysis - The PPI decreased by 0.4% month-on-month and 3.6% year-on-year, with the year-on-year decline widening from the previous 3.3%[2] - Energy prices showed a slight increase, with gasoline prices rising by 0.4% after a previous decline of 3.8%[1] - The manufacturing sector's capacity utilization rate was reported at 74.1%, indicating a downward trend in demand[2] Market Trends - The real estate market remains unstable, with property sales area and sales value declining by 2.9% and 3.8% respectively in the first five months[2] - The demand for durable goods and consumer products is weak, contributing to the low PPI and CPI figures[2] - The price of live pigs fell by 1.2% month-on-month, exceeding seasonal averages, indicating increased supply pressure[1] Future Outlook - The core CPI is expected to face limited recovery potential due to weak consumer confidence and internal competition pressures[2] - The global grain production forecast for 2025/2026 is expected to stabilize food prices, with a predicted increase in supply[2] - The oil price outlook remains uncertain, with OPEC+ considering production increases amid weak demand forecasts[2]

Group 1: Consumer Price Index (CPI) - In June, the national Consumer Price Index (CPI) ended a four-month decline, rising by 0.1% year-on-year, while the month-on-month change decreased by 0.1%, narrowing the decline by 0.1 percentage points compared to the previous month [1][4] - The increase in CPI was primarily driven by a rebound in industrial consumer goods prices, with food price declines slightly narrowing and service prices rising by 0.5% [1][3] - The core CPI, excluding food and energy prices, rose by 0.7% year-on-year, marking a 0.1 percentage point increase from the previous month and reaching a 14-month high [1][4] Group 2: Producer Price Index (PPI) - The national Producer Price Index (PPI) fell by 3.6% year-on-year in June, with the decline widening by 0.3 percentage points compared to the previous month, and a month-on-month decrease of 0.4% [5][11] - The decline in PPI was influenced by seasonal price decreases in certain raw materials, with significant drops in prices for black metal smelting and non-metal mineral products [6][7] - The overall PPI for the first half of the year decreased by 2.8% year-on-year, reflecting ongoing adjustments in the real estate market and weak consumer demand [7][8] Group 3: Economic Outlook - The outlook for PPI improvement in the second half of the year remains limited, with an estimated annual decline of around 2.3%, which is better than the first half's decline of 2.8% [8][9] - Domestic demand continues to be weak, with low levels of real estate and infrastructure investment, which are insufficient to drive up related resource prices [8][9] - The overall manufacturing capacity utilization rate is low, leading to a phase of oversupply in certain industries [8]

Report Summary 1. Core View - In June, the CPI data showed mixed trends, with the year - on - year change turning from decline to increase and the month - on - month decline narrowing. The core CPI year - on - year increase continued to expand, mainly supported by the rising gold price. The PPI year - on - year decline widened, indicating weak overall price data. Due to insufficient domestic demand and high external demand uncertainty, China still needs a loose monetary environment. The bond market is strengthening, and in July, it is expected to have a short - to - long - term rally, with long - term bonds likely to break through key levels [1][4]. 2. CPI Analysis 2.1 Core CPI - In June, the core CPI year - on - year increased by 0.7%, an increase of 0.1 percentage points from the previous month, and remained flat month - on - month. The "other goods and services" sub - item grew significantly, with a year - on - year increase of 8.1% in June, an increase of 0.8 percentage points from the previous month. This was mainly supported by the 41.3% year - on - year increase in domestic gold futures prices in June. After excluding this sub - item, the CPI and core CPI in June were - 0.1% and + 0.3% year - on - year respectively, showing a weak overall price level [1][9]. 2.2 Food CPI - In June, the food CPI year - on - year decline narrowed, but the month - on - month decline widened. It decreased by 0.3% year - on - year, a narrowing of 0.1 percentage points from the previous month, and decreased by 0.4% month - on - month, an expansion of 0.2 percentage points. Fresh fruit prices were the main drag, with a 3.3% month - on - month decline, affecting the CPI to drop by about 0.07 percentage points. Fresh vegetable prices rose by 0.7% month - on - month due to high - temperature and rainy weather [1]. 2.3 Non - food CPI - In June, the non - food CPI year - on - year changed from flat to an increase of 0.1%, and the month - on - month change turned from decline to flat. The rise in international oil prices was the main factor. The year - on - year decline of energy prices narrowed by 1.0 percentage points, and the downward pull on CPI year - on - year decreased by about 0.08 percentage points compared to the previous month. Gasoline prices rose by 0.4% month - on - month, driving energy prices to turn from a 1.7% year - on - year decline to a 0.1% increase [2]. 3. PPI Analysis 3.1 Production Materials PPI - In June, the production materials PPI year - on - year decline widened, and the month - on - month decline remained the same. It decreased by 4.4% year - on - year, an expansion of 0.4 percentage points from the previous month, and decreased by 0.6% month - on - month. This was mainly affected by the decline in industrial raw material prices and the increase in green power. Most domestic manufacturing raw material prices declined, and the prices of some industries such as ferrous metals and non - metallic minerals decreased due to weather and other factors. Green power increase also led to a decrease in power generation costs and related industry prices [3]. 3.2 Living Materials PPI - In June, the living materials PPI decreased by 1.4% year - on - year. Food prices decreased by 2.0% year - on - year, with the decline expanding by 0.6 percentage points. Durable consumer goods decreased by 2.7% year - on - year, with the decline narrowing by 0.6 percentage points. Clothing and general daily necessities prices increased by 0.1% and 0.8% year - on - year respectively, with the increase expanding by 0.1% and 0.2% respectively, possibly related to consumption - boosting policies [3]. 4. Market Outlook - The bond market is in a strengthening process. With the continuous loosening of funds, short - term interest rates are expected to decline more significantly in July. After the short - term decline, the yield curve will steepen, opening up space for long - term interest rates. The market is expected to have a short - to - long - term rally in July, and long - term bonds are likely to break through key levels. It is recommended to maintain a relatively high duration level, and a barbell - shaped portfolio allocation is relatively more advantageous. The report believes that the 10 - year Treasury bond yield is expected to fall to the 1.4% - 1.5% level [4][25].

Group 1: CPI Analysis - In June, the national CPI increased by 0.1% year-on-year, marking a shift from four consecutive months of decline, primarily driven by a rebound in industrial consumer goods prices [1][3] - The core CPI rose by 0.7%, reaching a 14-month high, indicating the effectiveness of policies aimed at stabilizing growth and boosting consumption [1][4] - The CPI's month-on-month decline was 0.1%, with urban areas also experiencing a 0.1% decrease, while rural areas remained stable [4] Group 2: PPI Analysis - The national PPI decreased by 3.6% year-on-year and 0.4% month-on-month, with the year-on-year decline widening by 0.3 percentage points compared to the previous month [1][5] - Industrial producer purchase prices fell by 4.3% year-on-year and 0.7% month-on-month, with a 2.8% decline in the first half of the year compared to the same period last year [4][5] - The PPI's decline is expected to persist due to insufficient industrial demand, but improvements in supply-demand relationships and macroeconomic policies may stabilize prices [5][7] Group 3: Policy Implications - The government aims for a GDP growth of around 5% and a CPI increase of about 2% this year, indicating potential for further fiscal and monetary policy support to stimulate demand and improve price performance [4][7] - Policies targeting the reduction of "involutionary competition" are anticipated to enhance supply-demand structures, supporting price increases in various sectors [7] - Supply-side structural reforms are expected to alleviate overcapacity issues, potentially boosting industrial prices and improving corporate profitability [7]

CPI Analysis - In June, the CPI decreased by 0.1% month-on-month and increased by 0.1% year-on-year, with the core CPI rising to 0.7% year-on-year, an increase of 0.1 percentage points from the previous month[1] - Food prices fell by 0.4% month-on-month, while non-food prices remained stable, reflecting a seasonal average of -0.2%[1] - Energy prices saw a slight increase due to rising international oil prices, with gasoline prices reversing from a 3.8% decline to a 0.4% increase[1][6] PPI Analysis - The PPI decreased by 0.4% month-on-month and 3.6% year-on-year, marking the lowest year-on-year decline this year[2][17] - The decline in PPI was influenced by seasonal decreases in coal and energy demand, alongside price drops in black metal and non-metal mineral products[3][18] - Despite some support from rising prices in the non-ferrous metal sector, overall PPI improvement is expected to be limited due to weak demand and internal competition pressures[2][24] Market Trends - The real estate market remains unstable, with property sales area and sales value down by 2.9% and 3.8% year-on-year respectively, impacting infrastructure investment[2][25] - Consumer confidence and investment willingness are low, contributing to a weak economic recovery outlook[2][25] - The core CPI's recovery space is limited, with internal competition suppressing price increases and overall consumer demand remaining weak[3][24]

Group 1 - The core issue of low price levels in China is insufficient domestic demand, reflecting the pains of economic transformation [1][5] - The Consumer Price Index (CPI) showed a slight increase of 0.1% year-on-year in June 2025, ending four months of negative growth, but the overall CPI for the first half of the year decreased by 0.1% compared to the previous year [2][4] - Food prices have significantly contributed to the negative CPI growth, with various food items like grains, cooking oil, and fresh vegetables showing year-on-year price declines [3][5] Group 2 - The government has set a CPI growth target of around 2% for 2025, the lowest since 2004, aiming to improve supply-demand relationships through policies and reforms [4] - Future CPI growth is expected to stabilize and gradually recover, with projections of 0.2% and 0.6% for the third and fourth quarters, respectively, leading to an overall annual increase of 0.1% [6] - The low CPI levels indicate ongoing macroeconomic imbalances, suggesting the need for increased public investment to stimulate demand and improve employment and income levels [7]

Core Viewpoint - The June CPI increased by 0.1% year-on-year, surpassing the previous value of -0.1%, while the PPI decreased by 3.6% year-on-year, lower than the previous value of -3.3%. The simulated deflation index based on CPI and PPI remains at -1.38%, consistent with May and at a low since February 2024 [1][5]. Summary by Sections CPI and PPI Analysis - The CPI data met expectations, with high-frequency data estimating a 0.14% year-on-year increase, while the PPI was significantly lower than the expected -3.0% [1][5]. - The PPI showed a base effect advantage with a 0.2% month-on-month recovery, but year-on-year figures continued to decline, indicating potential discrepancies in high-frequency data representation [1][7]. Price Movements in Industries - In June, the PPI for coal processing fell by 5.5% month-on-month, and the prices in coal mining and black metal industries also decreased, reflecting weaker performance compared to high-frequency data [1][7]. - The durable consumer goods segment of PPI fell from 0.1% to -0.1%, with notable declines in the computer and textile sectors, possibly influenced by tariff uncertainties and the "618" e-commerce promotions [2][8]. Positive Trends in PPI - The automotive manufacturing sector saw a month-on-month PPI increase of 0.2%, indicating initial positive effects of the "anti-involution" trend in production [3][9]. - The prices for complete vehicles and new energy vehicles rose by 0.5% and 0.3% respectively, suggesting a narrowing of year-on-year declines in these categories [10]. Notable CPI Details - Key details in CPI include a 0.3% month-on-month decrease in alcohol prices, a shift in clothing prices from increase to decrease during the "618" sales, and a 0.4% decline in transportation tools, indicating ongoing price reductions in the automotive retail sector [4][10]. - Medical service prices have shown a consistent upward trend, with a year-to-date increase of 0.7%, while pork prices fell by 1.2% month-on-month, although a rebound was noted post-June 26 [4][10]. Overall Price Stability and Future Outlook - The current task of stabilizing prices remains significant, with no signs of a turning point in the simulated deflation index. Various factors, including supply-demand fundamentals and external demand fluctuations, are influencing prices [4][13]. - Positive signs include a moderate rise in core CPI year-on-year, improvements in coal and meat prices since July, and initial positive signals in automotive manufacturing prices [4][13]. Key future indicators will be the recovery of local project starts and the continued effectiveness of the "anti-involution" trend [4][13].