China’s consumer price index rose just 0.5% year-on-year in July 2026, half of June’s reading and the softest print since January. This deceleration follows a peace deal signed around June 17 that reopened the Strait of Hormuz, through which roughly a fifth of global petroleum flows. The producer price index had peaked at 4.1% in June, reflecting energy price surges tied to the Middle East conflict in spring. The easing of energy costs now gives the People’s Bank of China more room to maintain accommodative monetary policy. Underlying deflationary pressures, notably weak consumer demand and falling food prices, remain firmly in place.
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