Core Viewpoint - The inflation data for June shows a divergence between CPI and PPI, with CPI rising slightly while PPI continues to decline, indicating a mixed economic environment influenced by various commodity prices [2][8][69]. Group 1: Divergence in Commodity Prices - In June, PPI fell by 0.3 percentage points to -3.6% year-on-year, primarily due to declining prices of upstream commodities like coal and steel, while CPI increased by 0.1% year-on-year, supported by rising food prices and platinum [2][9][69]. - The decline in PPI was driven by oversupply in sectors such as steel, cement, and coal, which contributed to a 0.4% month-on-month decrease, while international oil prices provided some support to PPI, contributing positively from oil and copper prices [2][9][69]. Group 2: Core Commodity PPI and CPI Trends - Core commodity PPI remains at historical lows, reflecting the impact of tariffs and low capacity utilization in domestic downstream industries, with a slight recovery of 0.4 percentage points to -1% year-on-year [3][21][70]. - In contrast, core commodity CPI increased by 0.3 percentage points to 0.6% year-on-year, driven by consumer stimulus policies that have bolstered domestic demand, particularly in durable goods and household items [3][27][70]. Group 3: Service CPI Performance - Service CPI remained stable at 0.5% year-on-year, with core service CPI also holding steady at 0.8%, while rental prices showed weakness, with a month-on-month increase of only 0.1% [4][30][61]. - The overall demand for services has remained stable, but the rental component, which is a significant part of the service CPI, has not performed as well compared to previous years [4][30][61]. Group 4: Future Outlook - The combination of policy measures and recovery in domestic demand is expected to alleviate inflationary pressures, but significant downward pressure on commodity prices is anticipated in the second half of the year, with PPI expected to underperform CPI [4][35][70]. - Factors such as tariff disturbances, low global oil inventories, and weakened investment in real estate and manufacturing are likely to constrain commodity prices, while low capacity utilization in downstream sectors will continue to suppress PPI recovery [4][35][70].

Core Viewpoint - The inflation data for June shows a divergence between CPI and PPI, with CPI rising slightly while PPI continues to decline, indicating mixed performance in commodity, core goods, and service prices [2][8][69]. Group 1: Divergence in Commodity Prices - In June, PPI fell by 0.3 percentage points to -3.6% year-on-year, primarily due to falling prices of upstream commodities like coal and steel, while CPI saw a slight increase of 0.1% year-on-year, driven by extreme weather affecting food supply [2][9][69]. - The decline in PPI was influenced by sufficient supply in steel, cement, and coal, which contributed to a 0.4% month-on-month drop, while rising international oil prices provided some support to PPI [2][9][69]. - CPI's increase was supported by a 12.6% rise in platinum jewelry prices, contributing to a 0.8 percentage point increase in the CPI for other goods and services [2][9][69]. Group 2: Core Goods Price Trends - Core goods PPI remains at historical lows, reflecting the impact of tariffs and low capacity utilization in domestic downstream industries, with a slight recovery of 0.4 percentage points to -1% year-on-year [3][21][70]. - The pressure on prices in high-export industries, such as computer communications and electrical machinery, continues, with respective declines of 0.4% and 0.2% [3][21][70]. - Conversely, core goods CPI increased by 0.3 percentage points to 0.6% year-on-year, driven by consumer stimulus policies, with notable price increases in durable goods and household textiles [3][21][70]. Group 3: Service Price Dynamics - Service CPI remained stable at 0.5% year-on-year, with core service CPI also holding steady at 0.8% [4][30][61]. - The virtual rent CPI, which is a significant component of service CPI, showed weakness, with a month-on-month increase of only 0.1%, below the historical average [4][30][61]. - The overall stability in service demand contrasts with the weaker performance of rent prices, indicating ongoing challenges in the housing market [4][30][61]. Group 4: Future Outlook - The combination of policy measures and recovery in domestic demand is expected to alleviate inflationary pressures, although significant downward pressure on commodity prices is anticipated in the second half of the year [4][35][70]. - Factors such as tariff disturbances, low global oil supply, and weakened investment in real estate and manufacturing are likely to constrain commodity prices further [4][35][70]. - The low capacity utilization in downstream sectors, particularly in private enterprises, is expected to hinder PPI recovery, with projections indicating continued weakness in PPI compared to CPI [4][35][70].