David Scutt, FOREX.com APAC Market Analyst, unpacks how China’s July inflation data reflects broader global price dynamics.
In July, Chinese consumer prices were flat year-on-year while core inflation rose to 0.8%, the highest level in 17 months, driven by falling food prices. Meanwhile, producer prices dropped 3.6%—the largest decline in two years—highlighting persistent weakness in domestic demand and trade uncertainty. Although authorities have introduced temporary cuts to overcapacity in sectors such as coal and lithium, these measures are less extensive than reforms enacted during previous deflation cycles. As a result, the outlook for sustained recovery remains uncertain. Importantly, the impact extends beyond China, with producer prices showing a strong correlation to US and German import costs. These signals are closely watched by central banks as they assess external inflation drivers in an increasingly interconnected global economy.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: David Scutt, FOREX.com APAC Market Analyst
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