Investment Rating - The report maintains a cautious outlook with expectations of persistent lowflation for CPI at 0.1% YoY and PPI deflation at -2.9% YoY for the second half of 2025 [4][7]. Core Insights - The core Consumer Price Index (CPI) increased by 0.1 percentage points to 0.7% YoY, supported by consumer subsidies, while food prices surged by 12% MoM SAAR due to adverse weather conditions [2][6]. - The Producer Price Index (PPI) remains under pressure, declining by 3.6% YoY, primarily driven by weak final demand in sectors such as ferrous metals and cement, reflecting soft construction activities [3][6]. - The central government's guidance on anti-involution is expected to mitigate excessive competition, although implementation challenges persist [4][7]. Summary by Sections CPI Analysis - CPI showed a slight increase to 0.1% YoY in June 2025 from -0.1% in May 2025, with food and energy prices contributing to this rise [6][7]. - Core CPI (excluding food and energy) rose to 0.7% YoY, indicating stable consumer price conditions [6]. PPI Analysis - PPI continued to decline, with a YoY decrease of 3.6% in June 2025, reflecting ongoing pressures from weak demand in construction and export-heavy sectors [3][6]. - Specific sectors such as mining and quarrying experienced significant declines, with PPI for this sector down by 13.2% YoY [6]. Economic Outlook - The report anticipates ongoing lowflation for CPI and persistent PPI deflation in the latter half of 2025, influenced by slower export activities and a high base effect from the previous year [4][7]. - The implementation of government policies aimed at rebalancing the economy remains uncertain, posing challenges for future economic stability [4].