中国宏观：通胀监测——再通胀暂歇

China Macro Inflation monitor: Reflation taking a break Deyun OuEconomist+852-2203-6166 China's reflation is taking a break.Both CPI and PPIrecordeddeclines on a month-on-month basis,with most components decelerating from May.The decline isbroaderthanloweroil prices; it reflectsthatsofteningdomestic demandis startingto negatively impactChina’sreflationmomentum. Yi Xiong, Ph.D.Chief Economist+852-2203-6139 Headline CPI fell to 1.0% YoY and-0.3% MoMdue to sharp declines in energy andsubdued food inflation, while core inflation also decreased, though services andAI-relatedproduct prices remained relatively resilient. •Energyprices fell sharply by 4.5% MoM, reducing the contribution to CPIby 0.2ppt.Food inflationalsoremained subdued at-1.6% YoY. •Core inflationedgeddown 0.1ppt to 1.0% YoY, the lowest reading sinceSeptember last year (after Lunar New Year adjustment). On a sequentialbasis, it fell 0.1% MoM, marking a second consecutive monthly decline.•Consumer goods pricesshowedweakness, dropping by0.5ppt to 1.1%YoY.Prices of home appliances and autos saw moderation,likelyresulting from diminishedimpact fromtrade-in subsidies.•Pricesof services and AI-related products remained relatively resilient.Services inflation held steady at 0.8% YoY, with inflation in education,tourism and recreation edging up by 0.1ppt on YoY horizon. Meanwhile,communication device prices accelerated by afurther 1.0ppt to 7.6%YoY. PPIrose to 4.1% YoY due to base effect; however, it declined by 0.3% MoMasthe oil-price shock on upstream and midstreamfaded, while only limited pass-through to downstream industries emerged amid weak domestic demand. •Oil-price shockinupstream and midstreamsectorsis fading.PPI inflationin fossil-fuel-relatedindustriesturned sharply negative on a MoM basis,weighing on prices forchemicals, plastics and rubber products. •There are signs that previous price hikes are being passed through tosome downstream sectors, such as equipment, furniture, automobilesandcommunication devices.However,the pass-through remainsmodest, constrained by softdomestic demand. We reiterate ourfull-yearCPIinflationforecast at 1.3% and PPI inflation forecastto 3.0%, both of which havebeen revised down in ourH2 outlook.The latest Junedata confirms that softeningdomestic demand has increasingly transmitted intoprice dynamics,preventingpricetransmission from upstreamto downstreamproducts.Looking forward,we expect more supportive domestic policyin thesecond half, fiscal spending in particular, will help revert the recent slip inconsumer prices.Absent such policy support, we see risk of CPI inflationweakening further. Source:Deutsche Bank Research, Wind 9 July 2026China Macro Source:Deutsche Bank Research, Wind Source:Deutsche Bank Research, Wind Source:Deutsche Bank Research, Wind 9 July 2026China Macro Appendix 1 Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). Inaddition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specificrecommendation or view in thisreport. Deyun Ou, Yi Xiong, Ph.D.. Important Disclosures Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from localexchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subjectcompanies, and other sources. For further information regarding disclosures relevant to Deutsche Bank Research,please visit our global disclosure look-up page on our website at https://research.db.com/Research/Disclosures/FICCDisclosures. Aside from within this report, important risk andconflict disclosures can also be found athttps://research.db.com/Research/Disclosures/Disclaimer. Investors arestrongly encouraged to review this information before investing. 9 July 2026China Macro Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively'Deutsche Bank'). Though the information herein is believed to be reliable and has been obtained from public sourcesbelieved to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness. Hyperlinks tothird-party websites in this report are provided for reader convenience only. Deutsche Bank neither endorses thecontent nor is responsible for the accuracy or security controls of those websites. If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in thisreport, or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, DeutscheBank may act as principal for its own account or as agent for another person. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for itsown account or with customers, in a manner inconsistent with the views taken in this research report. O