China Inflation Turns Positive in June 2025: Is Deflation Over?

After five months in negative territory, China inflation (CPI) recorded a slight increase of 0.1% in June 2025, signaling a fragile but important shift in China inflation in June 2025. The country’s battle with deflation may be easing—but not over. This CPI rebound is tied to food and service price stabilization, while factory-gate prices (PPI) continued their steep decline, falling by 3.6%.

This change is the first positive CPI figure since January, reflecting a mild uptick in domestic demand. However, it also underscores ongoing structural weaknesses like sluggish consumer confidence and real estate woes during the China inflation in June 2025 period.

📌 Key Takeaways

✅ China inflation rose 0.1% YoY in June, ending a five-month deflation streak
📊 Core inflation climbed to 0.7%, a 14-month high
📉 Producer prices (PPI) dropped 3.6% YoY, worsening from May
💬 Consumer spending remains weak despite summer discount campaigns
🏦 Policy easing expected in Q4 if growth doesn’t pick up

📊 Inflation Snapshot

What’s Driving the Shift?

Food Prices and Services Lead the Way

The slight CPI rise in China in June 2025 is driven by stabilization in food prices and a modest pickup in services, particularly tourism and dining, as the summer season begins. However, prices for durable goods and energy remain weak.

Read More: China’s Manufacturing Activity Rebounds in June

Factory Prices Still in Deep Decline

Although China inflation is no longer negative at the consumer level, the producer side is still under pressure. The 3.6% drop in PPI, the worst in nearly two years, points to weaker factory margins and tepid global demand.

What It Means for Policy and Growth

The People’s Bank of China (PBOC) is closely watching the China inflation in June 2025 data. With inflation still well below the government’s 3% target, more stimulus measures or a rate cut could arrive later in the year. Economists forecast mild loosening in Q4 if deflation risks persist.

🔮 What to Watch in the Coming Months

• July CPI and PPI reports: Will the upward CPI trend continue?
• Retail sales and housing data: Signals of sustained recovery or weakness?
• Policy updates from the PBOC and fiscal authorities

Final Thoughts

Even a 0.1% rise in China inflation is a critical marker for investors, consumers, and policymakers. It suggests deflation might be easing but with major risks still looming.

What do you think? Will inflation in China stabilize or slide again?
👇 Drop your thoughts in the comments, share this post, and check out our other updates on China’s economy.

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