China’s consumer and factory-gate price growth both cooled more than expected last month, suggesting tepid domestic demand and reflecting the impact of extreme weather and declining oil costs.

The producer-price index rose 3.5% from a year earlier in July, slowing from a 4.1% increase in the prior month, the National Bureau of Statistics said Sunday. That figure missed the 3.9% increase economists expected in a Wall Street Journal poll.

China’s factory-gate prices rose for a fifth consecutive month, lifted by surging oil prices amid the Middle East conflict. This followed a protracted 41-month decline that began in late 2022.

On a monthly basis, China’s producer prices declined 0.7% in July from the previous month, a broader drop than June’s 0.3% fall, as global oil prices retreated and unfavorable weather conditions took a toll on the world’s second-largest economy.