--- title: "July Inflation: Imported Inflation Fades" type: "News" locale: "en" url: "https://longbridge.com/en/news/295320893.md" description: "Both the year-on-year growth rates of CPI and PPI declined in July, mainly driven by the retreat of imported factors such as the correction in international oil prices. Core CPI showed a mild recovery, but domestic demand was insufficient to fully offset the pressure on upstream industries. AI-related industries provided support for PPI, albeit with limited strength. It is expected that the price center will stabilize in a moderate range in the third quarter, supported by the lagged transmission of rising oil prices and the release of summer consumption" datetime: "2026-08-09T09:33:43.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295320893.md) - [en](https://longbridge.com/en/news/295320893.md) - [zh-HK](https://longbridge.com/zh-HK/news/295320893.md) --- # July Inflation: Imported Inflation Fades Both the year-on-year growth rates of CPI and PPI declined in July, as domestic demand has not yet clearly taken over after the retreat of imported factors. The rapid decline in international oil prices since late May was reflected with a lag in July's PPI. With the ebbing of imported inflation, the core focus of price dynamics has returned to endogenous factors. Core CPI rose by 0.3% month-on-month and 0.9% year-on-year, indicating a mild recovery in domestic demand. However, the current strength of this recovery is insufficient to offset the fading impact of imported factors. **The main reasons for the year-on-year decline in July's PPI were the correction in commodity prices such as crude oil and the natural weakening under the influence of base effects.** Its internal structural divergence deserves more attention: Traditional and upstream industries are under significant pressure. Affected by a combination of factors including fluctuations in international oil prices, weak domestic demand for building materials, and construction disruptions due to extreme weather, the PPI for the petroleum extraction and petroleum processing industries fell by 9.2% and 6.0% month-on-month, respectively. The PPI for chemical raw materials, non-ferrous metals, and ferrous metals also saw significant month-on-month declines. The rapid correction in the crude oil chain has put pressure on upstream industries. **AI-related industries have become a supporting force.** The PPI for the computer and electrical equipment industries rose by 4.4% and 5.7% year-on-year, respectively, with the increases widening compared to the previous month. This indicates that under the global technology boom, AI-related chains have become an important driver of PPI at this stage. However, the impulse is relatively limited, and the supporting strength is insufficient to offset the phased decline in upstream industry prices. Looking ahead, international oil prices showed a significant rebound in July. The effect of price transmission may be reflected with a lag in the data for August and September, and the month-on-month decline in PPI is expected to narrow. **On the CPI side, two threads are running in parallel: the retreat of imported factors and the mild recovery of domestic demand.** In terms of food, the year-on-year decline in pork prices continued to narrow, while the year-on-year declines in fresh vegetables and fruits remained stable, suggesting that supply impulses are tending to fade. The rapid drop in oil prices drove a significant downward trend in the year-on-year growth rate of the transportation and communication component, becoming the main reason for the slowdown in CPI's year-on-year growth this month. In addition, core CPI, excluding food and energy, rose by 0.3% month-on-month, basically in line with seasonal levels, indicating that the underlying tone of domestic demand remains mild. Overall, the "cooling" of inflation data in July is more of a mirror image of the retreat of imported factors. With the lagged transmission of the brief warming in international oil prices and the concentrated release of summer consumption, the price center is expected to stabilize within a moderate range in the third quarter. Whether core CPI can continue its month-on-month positive growth will be a key window to test whether domestic demand can truly "take the baton." Risk Warning and Disclaimer The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. 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