China’s inflation gauge showed mixed signals in July, with the consumer price index unchanged from a year earlier after a 0.1% rise in June, according to National Bureau of Statistics data released Saturday. On a month-on-month basis, CPI climbed 0.4%, the fastest increase since January and above market expectations of 0.3%. Core CPI, which strips out volatile food and energy costs, accelerated to 0.8%—its highest level in 17 months—suggesting modest improvement in underlying demand. Food prices fell 1.6% from a year earlier, extending a six-month deflation streak and weighing on the headline index despite scorching summer temperatures that typically lift produce costs. The drop contrasted with gains in meat and vegetable oil prices that contributed to a 1.6% rise in the UN global food-price index the same month. Factory-gate prices remained firmly in negative territory. The producer price index declined 3.6% year on year, matching June’s near two-year low and exceeding economists’ forecast for a 3.3% fall. The slip marks the 25th consecutive monthly decline, underscoring weak industrial demand and lingering overcapacity despite Beijing’s recent push to curb “excessive competition” in sectors such as autos. Analysts said the stronger core CPI and slower month-on-month PPI contraction point to tentative easing of deflationary pressure, but warned that a protracted housing downturn and fragile consumer sentiment mean broader demand still needs policy support. Markets are watching whether targeted stimulus and anti-competition measures can lift prices more decisively in the coming months.