China’s annual inflation eased to 1.0% in June 2026 from 1.2% in both April and May, slightly below market expectations of 1.1%, marking the softest increase in three months. Non-food inflation slowed (1.5% vs 1.9% in May) due to a moderation in transport costs (4.1% vs 5.4%), as the government cut domestic retail gasoline and diesel prices in June amid lower energy prices following an easing of the Middle East conflict. Prices also continued to rise for clothing (1.4% vs 1.4%), healthcare (2.3% vs 2.1%), and education (1.4% vs 1.3%). Meanwhile, housing costs declined at a faster pace (-0.3% vs -0.2%). On the food side, prices fell for the third consecutive month (-1.6% vs -1.7%), largely due to persistently weak pork prices and continued declines in fresh fruit prices. Core inflation, excluding food and energy, increased 1.0% yoy, following a 1.1% rise in May. On a monthly basis, consumer prices fell 0.3% after edging down 0.1% in May, compared with market forecasts of a 0.2% decline.

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