Beijing: China's consumer inflation slowed in June, official data showed Thursday, as weak domestic demand continued to weigh on prices despite rising factory-gate inflation. The consumer price index increased by 1% year-on-year in June, down from 1.2% in May, and fell short of market expectations of 1.1%, as reported by the National Bureau of Statistics.

According to Anadolu Agency, core inflation, which excludes the often-volatile food and energy prices, also decreased to 1% from the previous month's 1.1%. Food prices saw a decline of 1.6% compared to the previous year, a slight improvement from May's 1.7% drop. In contrast, producer prices climbed 4.1% year-on-year in June, up from 3.9% in May, marking the fastest increase since July 2022. However, on a monthly basis, the producer price index dipped by 0.3%, indicating that the annual factory-gate inflation was partly bolstered by base effects.

The rise in energy and commodity costs, linked to the Middle East conflict, has contributed to increased input prices. However, weak household demand has restricted companies' capacity to pass these costs on to consumers. China's economy continues to exhibit uneven momentum, with areas such as exports and high-tech manufacturing showing resilience, while consumption and the property sector remain under pressure.

The International Monetary Fund on Wednesday adjusted its growth forecast for China in 2026 to 4.6%, up from 4.4%, citing robust growth in high-tech manufacturing, exports, and public infrastructure investment. In line with these developments, China has set its official growth target for this year at 4.5%-5%.