The latest data from the National Bureau of Statistics shows that the national Consumer Price Index (CPI) for July 2025 saw a year-on-year increase of zero, with a slight month-on-month increase of 0.4%. This data acts like a prism, reflecting the complex picture of the current Chinese economy—there are positive signals of overall price stability, but it also implies concerns about insufficient demand-side recovery momentum.
I. Structural Differentiation Behind the Data
Observing from sub-sectors, food prices decreased by 0.5% year-on-year, becoming the main drag, with pork prices dropping by 1.2% month-on-month due to previous capacity release, and fresh vegetable prices falling by 0.6% due to ample supply from a warm winter. However, non-food prices showed resilience: the peak summer travel season drove a 4.6% month-on-month increase in flight ticket prices, while household services and movie ticket prices rose by 0.9% and 0.7%, respectively, reflecting a warming trend in service consumption. This pattern of "declining food prices and rising service prices" resonates with the trend of sustained core CPI recovery in 2024, confirming the long-term logic of upgrading consumption structure from survival to development.
II. Data Signals in Policy Game
The current CPI trend interacts subtly with monetary policy. At the beginning of 2025, the central bank released liquidity through targeted RRR cuts, pushing the one-year LPR down to 3.35%. However, the July price data returned to zero, heating up market expectations for further interest rate cuts in the fourth quarter. Notably, the year-on-year decline in PPI has narrowed for three consecutive months to -3.6%. This combination of "mild CPI and bottoming PPI" provides a buffer for policymakers to balance stable growth and risk prevention. As experts from the National Development and Reform Commission stated: "The overall price operation currently meets expectations, but we must be wary of the dual challenges of imported inflation pressure and insufficient domestic demand."
III. China's Coordinates from a Global Perspective
In comparison to the international environment, the 2.7% year-on-year increase in the US CPI in July triggered market fluctuations, while the stable operation of China's price index highlights the differentiated path of macroeconomic governance. Data from East Money shows that China's CPI rose a cumulative 0.2% in the first half of 2025, far below the 3.5% increase in the US during the same period. This combination of "low inflation and stable growth" benefits from the "ballast stone" effect brought by consecutive years of bumper grain harvests, and reflects the effectiveness of supply-side structural reforms in moderating price volatility.
Standing at the critical juncture of the "14th Five-Year Plan", CPI data is not only the "barometer" of economic operation but also the "weather vane" for policy adjustments. With a series of incremental policies continuing to take effect, especially the expansion of the old-for-new policy for consumer goods, it is expected that prices will show a moderate rebound in the fourth quarter. However, to achieve the optimal combination from "price stability" to "reasonable price rebound", continuous efforts are needed in expanding effective demand and ensuring smooth economic circulation. After all, during the high-quality development phase, moderate fluctuations in CPI vividly reflect economic vitality.
