China’s Inflation Rate Slows to Zero, Producer Prices Fall Further in June 

China’s consumer prices index dropped to zero in June, while factory-gate prices fell further, showing sustained weakness in demand and raising concerns over the threat of deflation to the economy.

The National Bureau of Statistics of China reported on Monday that the country’s producer price index decreased by 5.4% year over year, which was more than analysts had predicted.

Meanwhile, consumer prices held steady on a yearly basis, which was in line with projections, while the month-on-month reading fell 0.2%.

Core inflation, which excludes volatile food and energy costs, declined from 0.6% to 0.4%.

The figures increase evidence that the recovery of the world’s second largest economy is slowing.

Confidence has been dented by rising deflation fears over the past few months. Lower commodity prices and sluggish demand both domestically and internationally are further challenges for Chinese producers.