Chinese retail sales rose 2.0 percent on the year in June, weakening sharply from growth of 3.7 percent in May. In month-over-month terms, retail sales fell 0.12 percent in June after advancing 0.51 percent in May.

Officials characterised GDP and monthly data published today as showing that"the national economy was generally stable with steady progress". However, they also cautioned that"the external environment is intertwined and complex, the domestic effective demand remains insufficient and the foundation for sound economic recovery and growth still needs to be strengthened". After noting in recent months that they will seek to"frontload and effectively implement" macroeconomic policies that have already been introduced, today's statement did not contain this language, perhaps indicating that some adjustment to policy settings may be considered in the near-term.

Data published today were generally weaker than expected. The China's RPI and RPI-P, however, rose from minus 29 and minus 30 to minus 7 and zero respectively, indicating that recent Chinese data in sum are now coming in close to consensus forecasts.

After rising 3.7 percent year-over-year in May, sales in June are expected to slow to 3.4 percent.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.