FX.co ★ China Producer Prices Fall the Most in Near 2 Years

In June 2025, China's producer prices saw a 3.6% year-over-year decline, surpassing market projections of a 3.2% drop and following a 3.3% decrease in May. This represents the 33rd consecutive month of producer deflation and the most significant decrease since July 2023. The decline is largely attributed to increasing external risks amid uncertainties regarding U.S. tariffs and consistently weak domestic demand. Production material costs fell more sharply than before, with rates decreasing by 4.4% compared to 4.0% in May. Significant drops were noted in the mining sector (-13.2% compared to -11.9%), raw materials (-5.5% compared to -5.4%), and processing prices (-3.2% compared to -2.8%). Consumer goods prices maintained their subdued trend, declining by 1.4%, consistent with May's figures. There were additional decreases in durable goods (-2.7% compared to -3.3%) and food (-2.0% compared to -1.4%). However, clothing prices experienced a slight increase of 0.1% after remaining stable in May, and prices for daily-use goods rose more quickly, increasing by 0.8% compared to 0.6%. On a monthly basis, the Producer Price Index (PPI) fell by 0.4% in June, maintaining the rate observed in March, April, and May, marking the largest monthly decline in six months. During the first half of 2025, factory-gate prices decreased by 2.6%.