能源冲击后2026年下半年通胀路径趋于平稳？

China Economics A Plateauing Inflation Path in 26H2E after Energy Shock? CITI'S TAKE Xinyu JiAC+852-2501-2792xinyu.ji@citi.com CPI and PPI staged a small miss compared with expectations in June, but itcame mostly from external factors including oil and gold prices. Domesticdemand could have remained lackluster but largely stable, with supplyconditions driving most of the volatility. For the whole quarter of 26Q2,nominal growth could rise further despite a real growth slowdown. Weexpect a plateauing path for inflation in 26H2E, with sporadic gains from AIinflation across CPI and PPI and a tentative stabilization of the pork cycle.Domestic demand could remain weak in this K-shaped economy, yettargeted support along with supply-side efforts on anti-involution couldcapture the downside to prices, in our view. The upcoming Politburomeeting could offer more signals. Xiangrong YuAC+852-2501-2754xiangrong.yu@citi.com See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations. Inflation readings missed expectations in June as the energy shock faded.CPIedged down to 1.0%YoY (Citi/Mkt: 1.1%YoY) from earlier 1.2%YoY. Its sequentialchange was softer than seasonality at -0.3%MoM vs. an average of -0.2%MoM inthe past three years. The small miss came from external factors of oil and gold. Bymajor components, nFood pricesdipped -0.4%MoM in June and stayed largely unchanged at -1.6%YoY (vs. -1.7%YoY in May). Pork downcycle could be closer to its bottom,with sequential change at -0.8%MoM, the smallest contraction in four months.Most food prices were stable, with vegetables at -1.0%MoM (-0.3%YoY) andfruits at -2.0%MoM (-0.7%YoY). Egg prices rose sharply amid hot weather at5.8%MoM (16.0%YoY). Extreme weather events as El Nino develops are startingto have a more visible impact on China, and it is likely that supply conditionsover the summer drives more price volatility. nEnergy pricesretreated as the oil shock faded. Prices dropped -4.5%MoM fortransportation fuel, and its year-on-year change normalized to 15.3%YoY from21.1%YoY in May, the first decline since the conflict. More downside is likelyahead in July with deeper adjustment of retail fuel prices, and year-on-yearchange could inch towards low single digits. nCore inflationdipped to 1.0%YoY, with its sequential change at -0.1%MoM andin line with seasonality.[1]Core goods inflation eased further to 1.3%YoY per ourestimate, the lowest reading in one year. Gold prices eased to -5.9%MoM and28.1%YoY and are largely responsible for the miss in June combined with oilprices. Durable goods prices are mixed: telecom equipment CPI rose to 7.6%YoY,an all-time high amid AI inflation, while auto CPI stayed unchanged at -1.1%YoYand home appliances prices retreated to 2.2%YoY (vs. 3.4%YoY).[2]Services CPIwas lackluster but steady at 0.0%MoM and 0.8%YoY before the travel season. Sequential PPI turned negative with energy shock fading.PPI dropped -0.3%MoM, the first negative reading since July 2025, while its year-on-yearreading continued to rise on base effect to 4.1%YoY (Citi/Mkt: 4.3/4.1%YoY). nMideast conflict:We estimated that energy and chemical related sectorsdragged 0.2ppts to sequential change of PPI of -0.3%MoM with Mideastconflict impact fading. With global oil prices easing in June, oil & gas extractiondropped -11.8%MoM and fuel processing declined -1.9%MoM in June, whilechemicals eased -2.0%MoM. nDomestic energy prices:Coal prices rose into the summer and partially offsetthe drag from global prices. PPI for coal extraction inched up to 5.6%MoM withits year-on-year change at 20.6%YoY after turning positive only three monthsago. Coal prices could have had wider spillover to ferrous metal processing,whose PPI rose to 5.2%YoY. nAI inflation:PPI for computer and other electronics mfg rose to 3.3%YoY, also anall-time high since 1996. Its momentum sustained with sequential change at0.7%MoM, and 3M/3M annualized change at 7.9% in the past few months,hinting at further upside ahead. The NBS noted broad-based price hikes amongelectronics, with VR at 8.4%MoM, wearables at 3.4%MoM and industrial PCs at3.3%MoM (NBS, Jul 9th). nDomestic demand:demand weakness remains a concern, as auto PPI remainedsubdued at -2.1%YoY and non-metallic mining at -3.3%YoY. Seasonal demanddrove air conditioner mfg prices up 0.4%MoM. Nominal growth is set to rise further in 26Q2E.CPI averaged 1.1%YoY in the pastquarter vs. 0.8%YoY in 26Q1, while PPI rose to 3.6%YoY vs. -0.6%YoY. GDP deflatorcould rise to 1½~2%, lifting nominal growth even as real growth slows – with ourGDP forecast at 4.5%YoY for 26Q2E, nominal growth could still challenge the highrate since mid-2023. We see a plateauing path for inflation in 26H2E.The miss in June for both CPI andPPI is mostly from external volatility, instead of further intensifying domesticweakness – on the former, the corrections seem to have been factored in the data.On the domestic side, stabilization of pork cycle co