Group 1: CPI and Core CPI Analysis - In July, CPI turned from a decrease of 0.1% to an increase of 0.4% month-on-month, better than the historical average of 0.3%, driven by rising prices in services and industrial consumer goods [2] - Core CPI increased by 0.4% month-on-month and 0.8% year-on-year, marking the highest level since March of the previous year, reflecting improved market supply-demand dynamics due to ongoing consumption promotion policies [3] - Service prices rose by 0.6% month-on-month, contributing significantly to the CPI increase, with notable price hikes in travel and entertainment services during the summer [3] Group 2: PPI and Production Material Prices - In July, PPI decreased by 0.2% month-on-month, but the decline was the smallest since March, indicating signs of stabilization in some industrial product prices [4] - Production material prices saw a month-on-month decline of 0.2%, with the decrease narrowing compared to previous months, suggesting a potential bottoming out in certain sectors [4] - Prices in coal, steel, photovoltaic, cement, and lithium battery industries showed reduced declines, indicating improved market competition and pricing stability [5] Group 3: Policy and Market Outlook - The "anti-involution" policy is expected to be a key focus in the second half of the year, aiming to regulate low-price competition and enhance product quality across various industries [7][8] - Financial measures are being implemented to guide industries away from excessive competition, with the central bank adjusting credit management to raise financing costs for overcapacity sectors [8] - The effectiveness of the "anti-involution" measures in sustaining price recovery remains uncertain, as it involves both traditional and emerging industries, and the impact on upstream demand could suppress prices [9]

Core Viewpoint - The article emphasizes the need for a coordinated approach to stabilize market expectations, expand effective demand, and foster innovation to return prices to a reasonable range amid improving supply-demand balance [1][3][4]. Group 1: Price Trends - In June, the national Consumer Price Index (CPI) rose by 0.1% year-on-year after four consecutive months of decline, while the core CPI increased by 0.7%, marking the highest growth in nearly 14 months [1]. - Despite the marginal improvement, the overall price level remains low, with a cumulative CPI decline of 0.1% in the first half of the year [2]. Group 2: Economic Environment - The current low price levels are seen as a phase in the economic transformation process, influenced by both cyclical and structural factors, as well as short-term and long-term issues [2]. - External factors such as geopolitical tensions and increased tariffs from the U.S. have contributed to global economic slowdown and uncertainty in external demand, impacting domestic prices [2]. Group 3: Policy Recommendations - To stabilize expectations, it is crucial to break the negative cycle of "price decline—demand contraction" by providing clear and continuous policy signals, including a moderately loose monetary policy [3]. - Expanding effective demand is essential for economic recovery, which involves enhancing residents' income and consumption capabilities, as well as improving social security systems [4]. - Promoting innovation is necessary to avoid low-level price competition, encouraging a shift from price wars to competition based on technology and service [4].

Group 1: CPI and PPI Overview - In May 2025, the CPI year-on-year change was -0.1%, consistent with the previous month and better than the market expectation of -0.2%[2] - The core CPI year-on-year increased to +0.6%, up from +0.5% in the previous month[2] - The PPI year-on-year decline expanded to -3.3%, compared to -2.7% previously, and was below the market expectation of -3.2%[2] Group 2: Price Trends and Influences - Domestic prices remain low due to falling energy prices and weak domestic investment demand, but certain sectors like travel services and high-tech products are seeing price increases[3] - Food prices in May showed a month-on-month decline of -0.2%, which is better than the five-year average decline of -1.4%[5] - Energy prices fell by 1.7% month-on-month, contributing nearly 70% to the total CPI decline[5] Group 3: Future Outlook - CPI is expected to maintain low growth rates, with potential downward pressure from the pig market due to policy adjustments leading to increased supply[3] - PPI's month-on-month decline is anticipated to narrow as international oil prices stabilize and trade conditions improve[3] - The performance of core CPI and CPI may diverge, influenced by external factors such as oil prices and domestic consumption recovery[4]