HONG KONG—China’s headline consumer inflation rate surged to its fastest pace in two years in July, but a drop in core inflation points to a different problem: weak domestic demand.
After edging up just 0.9% in 2021 and staying largely within the government’s comfort zone since the start of the pandemic, headline consumer prices in the world’s second-largest economy rose by 2.7% in July from a year earlier, accelerating from June’s 2.5% gain, as food prices soared, China’s National Bureau of Statistics said Wednesday.