China’s monthly inflation cools to 0.5% as Iran war impact eases

China’s consumer price index rose just 0.5% year-on-year in July 2026, half the 1.0% reading posted in June and the softest inflation print since January. The culprit, or rather the lack of one: the fading aftershock of the Iran conflict that roiled global energy markets for much of the spring. From oil shock to price relief The story really starts in early March 2026, when conflict in the Middle East involving Iran disrupted shipping through the Strait of Hormuz, one of the world’s most critical oil chokepoints. Roughly a fifth of global petroleum flows pass through that narrow waterway, so when it effectively closed, crude prices surged and dragged energy costs higher worldwide. China, the world’s largest crude importer, felt the squeeze quickly. The country’s producer price index, which tracks factory-gate costs, climbed to 3.9% year-on-year in May 2026, near a four-year high. By June, PPI had ticked even higher to 4.1%, reflecting the full force of Iran-related energy surges rippling through supply chains. A peace deal signed around June 17, 2026, reopened the Strait of Hormuz and almost immediately began deflating the energy premium baked into global commodity markets. Oil pri...