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Alice Li

China’s factory-gate prices continued to rise in June despite a temporary easing of the US-Iran conflict that had previously driven up energy costs, while domestic demand remained weak.
The producer price index (PPI) increased 4.1 per cent year on year last month, compared with a 3.9 per cent rise in May, according to data released by the National Bureau of Statistics (NBS) on Thursday.
The increase matched a projection from economists polled by financial data provider Wind.
Meanwhile, the national consumer price index (CPI), a major gauge of inflation, rose by 1 per cent year on year last month, compared with a 1.2 per cent increase in May. The reading, a three-month low, missed the 1.16 per cent year-on-year growth projected in the Wind survey.
Dong Lijuan, a senior statistician at the NBS, noted in a statement that despite rising domestic demand from specific sectors – such as AI equipment and air conditioning due to the summer heat – falling global crude oil prices slowed the expansion of factory-gate prices on a month-on-month basis.
China’s factory-gate prices have been rising since March, due to the imported inflation resulting from the US-Iran conflict, which broke a spell of deflation stretching back 41 months.
Last month, the United States and Iran reached an interim ceasefire agreement holding rounds of talks in Switzerland and Qatar to uphold it. Following a new round of military strikes in recent days, US President Donald Trump has declared that agreement “over”.
“Both CPI and PPI dropped month-on-month. This is partly driven by weaker commodity prices,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.


The world’s second-largest economy is still struggling with sluggish domestic consumption. In May, the country registered the first contraction in retail sales since lifting pandemic controls in late 2022.
Lynn Song, chief economist for Greater China at ING, said the economic data showed that China is moving from near-deflation to low positive inflation, adding he expected policymakers to enact a 0.1 percentage point cut to interest rates in the second half of this year.
“With loan growth still looking very weak, and domestic consumption and investment data showing troubling signs, we expect there may be a growing case for this easing sometime in the third quarter.”
Core inflation – a metric that excludes volatile food and energy prices – grew 1 per cent year on year last month, the NBS said.
Consumer goods prices were up 1.1 per cent, while service prices rose 0.8 per cent. Food prices were down 1.6 per cent.
Beijing has attempted to shore up household spending through policies such as its consumer goods trade-in programme, which was renewed this year.
The National Development and Reform Commission, the country’s top economic planner, said last month the policy’s multiplier effect was more pronounced in 2026, with every yuan of government funding generating 10.3 yuan (US$1.51) in consumer spending, up from 7.8 yuan last year.
Zhang noted that this month’s meeting of the ruling Communist Party’s Politburo would be an event to watch. “The market is waiting for policy signals from the meeting on potential measures to stabilise domestic demand.”
The July Politburo meeting, expected to be held at the end of the month, typically covers economic policy and maps out the government’s priorities for the remainder of the year.


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The producer price index rose for a fourth month in a row amid a momentary ceasefire, though consumer price increases missed expectations


The producer price index rose for a fourth month in a row amid a momentary ceasefire, though consumer price increases missed expectations.


China’s factory gate prices rise in June amid brief Iran war respite

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The producer price index rose for a fourth month in a row amid a momentary ceasefire, though consumer price increases missed expectations

The producer price index rose for a fourth month in a row amid a momentary ceasefire, though consumer price increases missed expectations