China’s inflation rate declined in July for the first time in two years.
The Consumer Price Index (CPI) in the nation of 1.4 billion people fell by 0.3% in July from a year earlier, but rose 0.2% from June of this year, according to the National Bureau of Statistics.
The July inflation reading marked the first year-over-year decline in China since early 2021.
A 26% annualized drop in pork prices, a food staple in China, contributed to the overall decline in China’s inflation rate. That was partly offset by tourism prices rising 13.1% from a year ago.
Core inflation, which excludes volatile food and energy prices, rose by 0.8% in July from a year ago, the highest increase since January of this year.
Weak domestic demand has persisted in China since the Covid-19 pandemic. China’s inflation rate was flat in June from a year ago.
Soft domestic demand has led several economists to warn of deflation, which is a persistent decrease in consumer prices.
Oxford Economics forecasts that China’s inflation rate will grow by 0.5% for all of this year.
The government’s statistics agency is scheduled to release retail sales and industrial production data for July on August 15.