China's Recovery on Shaky Ground: CPI Rebound Meets Deepening PPI Deflation

June 2025 inflation statistics for China show a varied economic scene. With a slight increase over market estimates and the first rise in five months, the Consumer Price Index (CPI) saw a small 0.1% year-on-year gain. Although the rise is small, this suggests a possible stability in consumer demand. CPI likewise improved monthly, declining just 0. 1% against May's more dramatic drop.

But the Producer Price Index (PPI) paints a different picture, down 3. 6% year-on-year. With this, the sharpest yearly PPI decrease since July 2023 is indicated; this exceeds projections and shows a sharper fall than in prior months. Additionally, pointing to continuous flaws in China's manufacturing sector, including mining, raw materials, and processing costs, it denotes the 33rd straight month of producer deflation with perpetually low consumer goods prices.

These statistics indicate that though customer prices may be approaching bottom, China's industrial sector is still struggling with significant deflational forces. This scenario raises questions on the profitability of producers and the general economic speed. Both industry and legislators are likely to see these results as proof of a weak recovery, with ongoing hazards influencing both domestic consumption and industrial output.