China's Factory-Gate PPI Rose 3.5% in July 2026 as Monthly Growth Eased

China's Producer Price Index (PPI) for factory-gate goods rose 3.5% year-on-year in July 2026, slowing from a 4.1% increase recorded in June, according to data released by the National Bureau of Statistics (NBS). On a month-on-month basis, PPI declined by 0.7%. Meanwhile, industrial purchasing prices increased 5.5% year-on-year but dropped 1.0% sequentially. For the first seven months of 2026, PPI output prices averaged a 1.8% year-on-year increase, while purchasing prices rose 2.8%, highlighting persistent cost divergence between raw input industries and downstream consumer sectors.

The PPI serves as a key gauge for industrial enterprise profitability, upstream commodity cost pressures, and broader inflationary trends across Chinese manufacturing supply chains. While year-on-year figures show continued expansion in upstream producer prices, the sequential monthly decline suggests that price pressures on downstream manufacturers may be easing, potentially offering relief to profit margins in end-user manufacturing sectors.

China's factory-gate prices continued their year-on-year expansion in July 2026, though sequential growth lost momentum compared to the previous month, official data released by the National Bureau of Statistics showed. The Producer Price Index rose 3.5% from a year earlier in July, moderating from the 4.1% year-on-year growth recorded in June. On a month-on-month basis, the headline index decreased by 0.7%. Industrial purchasing prices—reflecting the costs paid by factories for intermediate inputs—rose 5.5% year-on-year in July, while contracting 1.0% from June. Over the first seven months of 2026, average PPI output prices grew 1.8% year-on-year, while purchasing prices rose 2.8%. Price dynamics varied significantly across industrial sectors. Production materials prices jumped 4.8% year-on-year in July, contributing approximately 3.72 percentage points to the overall factory-gate price increase. Among production materials, extraction industry prices led gains with a 16.4% year-on-year rise, followed by raw material industries at 6.1% and processing industries at 3.1%. In contrast, factory prices for consumer goods fell 0.8% year-on-year, dragging down total PPI by about 0.17 percentage points. Within consumer goods, food prices fell 2.1%, clothing dropped 1.1%, and general daily necessities slipped 1.0%, whereas consumer durables posted a modest 0.4% increase. Sequential month-on-month figures pointed to cooling pressures. Production materials prices fell 0.9% from June, driven by a 2.4% drop in raw material prices and a 0.2% decline in extraction prices. Consumer goods factory prices contracted 0.1% month-on-month. On the purchasing side, input price shifts reflected uneven commodity trends. Year-on-year gains were led by non-ferrous metal materials and wires, which surged 19.0%, along with fuel and power and chemical raw materials, both advancing 9.3%. Conversely, purchasing prices for construction materials and non-metals fell 4.1% year-on-year, while agricultural and sideline products declined 0.8%.