Didn't think it would get worse! What Happened to China's Inflation?

<p>&nbsp;Before the US inflation data was released this week, investors were first shown inflation data from the world's second largest economy, China.</p><p><br /></p><p>Disappointingly, China's consumer price index (CPI) read zero or was unchanged in June, marking the weakest rate since prices fell in February 2021.</p><p><br /></p><p>Core inflation, which excludes food and energy costs, slowed to 0.4% last month from 0.6% recorded in May.</p><p><br /></p><p>More disappointing for investors is the producer price (PPI) or factory-gate price fell further to the lowest level in seven years with a fall of 5.4% from the previous year.</p><p><br /></p><p><br /></p><p>Both indicators add to evidence that the recovery in China is weakening, where fears of deflation are weighing on confidence.</p><p><br /></p><p>It will also prompt more speculation about possible stimulus by the authorities to advance the economic recovery.</p><p><br /></p><p>Following the weak data, commodity currencies traded lower in the Asian session today.</p><p><br /></p><p>The Aussie and New Zealand dollars were trading down about 0.4% against the greenback respectively to trade around 0.6665 and 0.6185 at the time of writing.</p>