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China’s monthly inflation cools as impact from Iran war eases

July CPI rises at slowest pace since January while factory-gate price growth decelerates

Two people look at rows of Nike shoes inside a store, with shelves of shoe boxes and sale signs visible.Retail sales, a measure of consumer spending that covers goods and catering, showed a monthly decline this year for the first time since 2022© Wu Hao/EPA/Shutterstock

Thomas Hale in Shanghai

PublishedAugust 9 2026

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China’s consumer price index last month rose at its slowest rate since January while factory-gate price growth decelerated, in a sign that the inflationary impact of the war in Iran is easing.

The CPI added 0.5 per cent year-on-year in July, official figures showed on Sunday, below forecasts of 0.8 per cent and June’s growth of 1 per cent. China’s National Bureau of Statistics pointed to slowing year-on-year increases in gasoline prices as a major factor in the weaker CPI rate.

Producer price growth moderated to 3.5 per cent from 4.1 per cent a month earlier, the first such moderation since the outbreak of war in Iran which jolted the index back into positive growth territory after years of deflation.

The closure of the Strait of Hormuz following US and Israeli attacks on Iran prompted surging oil prices, which have since retreated from earlier highs.

Brent crude, the international oil benchmark, on Friday was trading at $83.55 a barrel compared with more than $110 in April.

The latest data follows recent figures highlighting concerns over economic momentum in China, which has for years grappled with deflation amid a drawn-out property slowdown.

The official manufacturing purchasing managers’ index in July fell for the first time in five months and a separate PMI gauge covering services and construction hit its lowest level since 2022.

Retail sales, a measure of consumer spending that covers goods and catering, declined in May for the first time since 2022 and added just 1 per cent in June, while fixed-asset investment, another monthly gauge, is down 5.7 per cent year-on-year in the first half.

Official GDP growth in the second quarter was 4.3 per cent, below an official annual target that was already the lowest in decades.

At a July meeting of China’s Politburo, a top decision-making body of the Communist Party, leaders pledged to accelerate fiscal spending but stopped short of unveiling any major stimulus.

Against pressure at home, China’s exports have grown sharply this year and added nearly 24 per cent year-on-year in July. China’s trade surplus in goods is now above the same period in 2025, when it ultimately reached a record high of $1.2tn, figures on Friday showed.

China’s National Bureau of Statistics cited price increases in oil and gas extraction, fuel processing and chemical raw materials for the PPI index.

It added that gasoline prices, which rose 1 per cent year-on-year, fell 11 per cent month-on-month. China’s CPI edged 0.1 per cent lower in July compared with the previous month.

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Read Original at Financial Times →