BEIJING, Aug 9 Reuters China39;s consumer prices fell into deflation in July, while factory gate prices extended their declines, as the world39;s secondlargest economy struggled to revive demand and pressure mounted for authorities to release more direct stimulus.

The consumer price index CPI for the month dropped 0.3 yearonyear, the National Bureau of Statistics NBS said on Wednesday, a slightly slower fall than the median estimate for a 0.4 decrease in a Reuters poll. It was the first yearonyear decline since February 2021. CPI was unchanged in June.

The producer price index PPI fell for a 10th consecutive month, down 4.4 from a year earlier after a 5.4 drop the previous month. That compared with a forecast for a 4.1 fall.

China39;s economic recovery slowed after a brisk start in the first quarter, as demand at home and abroad weakened. Authorities have rolled out a flurry of policy measures to support the economy, with more steps expected.

Both CPI and PPI in yearonyear terms fell into negative territory and confirmed economic deflation, said Xing Zhaopeng, senior China strategist at ANZ.

Xing expected the CPI to hover around 0 in the second half of the year, saying it would be hard to manoeuvre monetary policy. The Politburo meeting called for a stable yuan exchange rate, which would conflict with monetary easing.

Asian shares were on the defensive on Wednesday as the Chinese price data confirmed its economic recovery economy was losing steam.

China39;s stock…