China's Inflation Slows Amid Weak Domestic Demand and Lower Fuel Prices

Li Chen
10 Aug, 2026
London

China's stocks lacked momentum on Monday, as investors assessed soft inflation data. 

The Hang Seng Index increased 0.6%, and the mainland-focused CSI 300 Index decreased 0.5% amid rising expectations of additional policy support to boost consumer spending. 

China's annual consumer price inflation eased to 0.5% in July from 1.0% in the previous month as food prices continued to decline while non-food inflation slowed further. 

headline inflation eased for the third consecutive month, and dropped to the lowest level since January, driven by a 1.5% decrease (compared to 1.6% in June) in food prices and a softer rise in non-food prices by 0.9% (compared to a 1.5%% rise). 

Core inflation, which excludes food and energy prices, rose an annual pace of 0.9%, slower than 1.0% in June, according to the data released by the National Bureau of Statistics. 

China's annual producer price inflation eased to 3.5% in July from 4.1% in the previous month amid weak domestic demand and fading energy-driven inflation as tensions in the Middle East eased.  

Producer prices rose for the fifth consecutive month after falling for 41 consecutive months amid persistent weak domestic demand and intense price competition.  

The mid- and downstream manufacturers continued to feel squeezed amid rising input costs and weak demand, limiting their ability to pass on costs.  

At the recently completed Politburo policy meeting, China's top leaders vowed to support economic growth and promote stock market stability as China's tech companies line up to raise capital.   

 

China Indexes and Stocks 

The Hang Seng Index increased 0.6% to 25,816.25, and the mainland-focused CSI 300 Index fell 0.5% to 4,670.05. 

Zhonji Innolight decreased 7.5% to ¥850.05, Eoptolink Technology declined 7.3% to ¥391.50, and Suzhou Dongshan Precision Manufacturing dropped 7.4% to ¥180.86. 

China Vanke Company inched higher 0.8% to HK $2.52, China Overseas Land Investment increased 0.8% to HK 13.24, and Sun Hung Kai Properties advanced 0.6% to HK $116.10.