Beijing, China – In July, China’s consumer price index (CPI) inflation reached a five-month high at 0.5% year-over-year, aligning with initial forecasts. This figure slightly surpassed consensus estimates of 0.3% year-over-year, indicating a positive trend in inflation rates for the country.

The increase in CPI was primarily driven by food prices, which transitioned from deflation to a stable 0.0% year-over-year level. Notably, pork and vegetable prices surged, offsetting declines in other food products like fruits, dairy, beef, and mutton. The growth in pork prices reached a peak not seen since 2022, indicating a significant impact on overall inflation rates.

On the other hand, non-food inflation slightly moderated to 0.7% year-over-year, with transportation facilities, communications facilities, and rents experiencing declines. However, analysts predict continued weakness in prices for transportation and communication facilities, while taking a cautious approach towards the rental market due to ongoing policy support for real estate.

Despite the potential for inflation to trend higher in the coming months, experts do not foresee it hindering further monetary policy easing. With low inflation rates and subdued credit activity, there remains a conducive environment for additional rate cuts this year. The possibility of more rate cuts becomes viable if global trends move towards accelerated rate reductions.

Overall, the recent rebound in CPI inflation in China was attributed to a reduced drag from food prices, signifying a positive turn in the country’s economic landscape. The outlook remains optimistic for further monetary easing, with expectations of at least one more rate cut in the near future.