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China’s annual inflation rate has dropped to -0.3%, heightening fears the country’s sluggish recovery from COVID could have a wider impact on the global economy.

The year-on-year drop in the consumer price index (CPI) in July comes after figures earlier this week revealed imports and exports in the country also fell much faster than expected last month.

CPI had been at zero the month before.

Read more: Falling prices in China might just be bad for everyone

There had been hopes that business would boom in China as it reopened following severe lockdown restrictions, which in turn would potentially help the wider global economy.

But, amid signs of a stuttering recovery and low consumer confidence, there are fears the country could now be entering an era of much slower economic growth, causing prices and wages to stagnate.

Officials said on Wednesday that the producer price index (PPI) was also down 4.4% on a year earlier, the 10th consecutive decline in a row for factory gate prices.

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It comes in contrast to many Western nations, including the UK, which have been struggling with high inflation. That has led central banks to hike interest rates in an attempt to slow the pace of soaring prices.

Gary Ng, a senior economist at Natixis, said the latest figures “shows China’s slower-than-expected economic rebound is not strong enough to offset the weaker global demand and lift commodity prices.”

The data has prompted calls for authorities in Beijing to take further action to stimulate the economy, although some believe it may just be a temporary blip.

Read more:
China’s zero-COVID policy blamed as economy contracts
Crisis-hit city reveals how cruel China’s housing boom can be

Chinese authorities have also downplayed concerns about deflation.

Liu Guoqiang, deputy governor of the central bank, predicted last month there was no risk of deflation in the second half of the year, but cautioned the economy still needed time to return to normal after the pandemic.

The annual fall in CPI last month has been blamed on a sharp decline in pork prices, which came after heavy rains hurt supplies.

But on a month-on-month basis, it actually rose 0.2%, driven by a surge in holiday travel.

China recorded an average CPI rate of 2% in 2022 and officials in Beijing have set a target of around 3% for this year.

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Deadly Russian strikes condemned as ‘savage’ – as dozens more injured in Ukrainian city

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Deadly Russian strikes condemned as 'savage' - as dozens more injured in Ukrainian city

At least four people have been killed in the eastern Ukrainian city of Kharkiv after a series of Russian attacks.

President Volodymyr Zelenskyy described one of the attacks as a “savage killing”, saying dozens of people had been injured.

It comes after Kyiv embarrassed Moscow when it launched a daring drone raid deep inside Russia last weekend, destroying dozens of bombers.

Firefighters work at the site of a building hit by a Russian drone strike in Kharkiv. Pic: Reuters
Image:
Firefighters work at the site of a building hit by a Russian drone strike in Kharkiv. Pic: Reuters

Meanwhile, attempted US-led peace talks between the two appear to be floundering.

During the attacks on Saturday, Kharkiv mayor Ihor Terekhov said: “Kharkiv is currently experiencing the most powerful attack in the entire time of the full-scale war.”

The first wave of the Russian strike was a large drone-and-missile attack in the early hours of Saturday morning.

Nightly attacks from Moscow have become a routine part of the conflict.

At least three people died and 21 others were injured. There are reports that some people remain trapped underneath the rubble.

Then, in the afternoon, Russia dropped aerial bombs on the city centre, killing at least one person and wounding more.

Ukraine and Russia also accused one another of trying to sabotage a planned prisoner exchange.

Rescuers and paramedics carry an injured resident after she was freed from debris in Kharkiv.
Pic: Reuters/Sofiia Gatilova
Image:
A woman was freed from debris in Kharkiv. Pic: Reuters/Sofiia Gatilova

Residents reckon with Russian strikes

As emergency workers fought fires at the attack sites in Kharkiv, residents had to deal with the fallout of strikes that could have claimed their lives.

Alina Belous tried to extinguish flames with buckets of water to rescue a young girl trapped inside a burning building, as she called out for help.

“We were trying to put it out ourselves with our buckets, together with our neighbours,” she said.

“Then the rescuers arrived and started helping us put out the fire, but there was smoke and they worried that we couldn’t stay there.

“When the ceiling started falling off, they took us out.”

An injured resident is taken away by paramedics after being rescued in Kharkiv following a Russian attack.
Pic: Reuters/Sofiia Gatilova
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A man is taken away by paramedics in Kharkiv. Pic: Reuters/Sofiia Gatilova

An apartment building hit by Russia's attack on Kharkiv on Saturday.
Pic: Reuters/Vitalii Hnidyi
Image:
An apartment building hit by Russia’s attack on Kharkiv. Pic: Reuters/Vitalii Hnidyi

Vadym Ihnachenko said he initially thought it was a neighbouring building going up in flames – not his own.

He was forced to flee after seeing smoke coming from his building’s roof.

Diplomatic efforts stall

Several other areas in Ukraine were also hit, including the regions of Donetsk, Dnipropetrovsk, Odesa, and the city of Ternopil, Ukrainian foreign minister Andriy Sybiha said.

Russia acknowledged the attacks, but not the deaths, saying it had targeted military sites, while pictures show apartment blocks on fire.

Read more:
Putin plays the victim to get the US onside
Putin vowed revenge against Ukraine, Trump says

Rescuers carry away an injured resident after the first wave of Russia's attack on Kharkiv.
Pic: Reuters/Sofiia Gatilova
Image:
Rescuers carry the injured after the first wave of Russia’s attack. Pic: Reuters/Sofiia Gatilova

The regional governor, Oleh Syniehubov, said children were among those injured in the first attack.

While a US-led diplomatic push for peace has led to two rounds of direct peace talks between delegations from Russia and Ukraine, they delivered no significant breakthroughs.

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Later on Saturday, Russia and Ukraine also accused each other of endangering plans to swap 6,000 bodies of soldiers killed in action.

This had been agreed during peace talks in Istanbul, Turkey, on Monday.

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Elon Musk post claiming that Donald Trump appears in Epstein files removed from X

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Elon Musk post claiming that Donald Trump appears in Epstein files removed from X

Elon Musk’s social media post claiming Donald Trump is in files relating to the disgraced paedophile financier Jeffrey Epstein has been removed.

The tech billionaire made the allegation on X as he traded blows with the US president in a dramatic public row.

In the post, which now appears to have been deleted, Musk said: “@realDonaldTrump is in the Epstein files. That is the real reason they have not been made public.

“Mark this post for the future. The truth will come out.”

He gave no evidence for the claim, which was dismissed by the White House – with the post disappearing from his social media platform by Sunday.

Users clicking on the message – first posted on Thursday – were instead greeted with: “Hmm…this page doesn’t exist. Try searching for something else.”

Epstein killed himself in his jail cell in August 2019 while awaiting trial on charges of sex trafficking minors.

File pic: Reuters
Image:
File pic: Reuters

JD Vance has his say

Amid the fallout, vice president JD Vance said Musk was making a “huge mistake” going after Mr Trump but characterised him as an “emotional guy” who got frustrated.

He made the comments in an interview with comedian and podcaster Theo Von – one of the “manosphere” influencers the Trump team targeted to gain votes with young men during the election.

“I hope that eventually Elon comes back into the fold. Maybe that’s not possible now because he’s gone so nuclear,” Mr Vance said.

He also claimed that such outbursts “happen to everyone”, adding: “I’ve flown off the handle way worse than Elon Musk did in the last 24 hours.”

‘Big ugly spending bill’

Musk and Mr Trump’s relationship broke down publicly on Thursday, just days after the Tesla and SpaceX chief executive left his role as a special government employee.

In a fiery exchange, Musk posted a series of messages on X criticising the president’s signature tax and spending bill as a “big ugly spending bill”.

President Trump posted on Truth Social, saying Musk had been “wearing thin” and claimed he “asked him to leave” his government position – something Musk denied.

Read more:
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The big, beautiful bust-up everyone knew was coming

Musk then hit back with his claim about the US president appearing in the Epstein files.

Press secretary Karoline Leavitt dismissed the comment in a statement.

“This is an unfortunate episode from Elon, who is unhappy with the One Big Beautiful Bill because it does not include the policies he wanted,” she said.

“The president is focused on passing this historic piece of legislation and making our country great again.”

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The spat hit Tesla shares, which closed down 14.3% on Thursday, losing about $150bn (£111bn) in value.

In an interview with ABC News, Mr Trump was asked about reports a phone call was scheduled between him and Musk on Friday.

He reportedly said: “You mean the man who has lost his mind?”

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Kilmar Abrego Garcia: Man wrongly deported from US to El Salvador has been returned to face criminal charges

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Kilmar Abrego Garcia: Man wrongly deported from US to El Salvador has been returned to face criminal charges

A man who was mistakenly deported to El Salvador by the Trump administration has been returned to the US to face criminal charges.

Kilmar Abrego Garcia was charged in an indictment filed in federal court in Tennessee with conspiring to transport illegal immigrants into the US, attorney general Pam Bondi said on Friday.

Court records have shown the indictment was filed on 21 May, more than two months after he was deported from the US under a controversial 18th-century wartime law.

Attorney General Pam Bondi speaks as Deputy Attorney General Todd Blanche listens during a news conference about Kilmar Abrego Garcia at the Justice Department, Friday June 6, 2025, in Washington. (AP Photo/Julia Demaree Nikhinson)
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US attorney general Pam Bondi, alongside her deputy Todd Blanche, outlined the charges at a news conference. Pic: AP

In a statement, Abrego Garcia’s lawyer Andrew Rossman said it would now be up to the US judicial system to ensure he received due process.

“Today’s action proves what we’ve known all along – that the administration had the ability to bring him back and just refused to do so,” he said.

Salvadoran Abrego Garcia, 29, was deported from Maryland despite an immigration judge’s 2019 order granting him protection after finding he was likely to be persecuted by local gangs if he was returned to his native country.

The indictment alleges Abrego Garcia worked with at least five co-conspirators to bring immigrants to the US illegally and transport them from the border to other destinations in the country.

More from US

On Friday, Ms Bondi outlined the charges at a news conference, saying: “The grand jury found that over the past nine years, Abrego Garcia has played a significant role in an alien smuggling ring.

“He made over 100 trips, the grand jury found – smuggling people throughout our country… MS-13 [international criminal gang] members, violent gang terrorist organisation members… throughout our country.

“He will be prosecuted in our country, sentenced in our country if convicted and then returned after completion of his sentence.”

Ms Bondi said Salvadoran President Nayib Bukele agreed to return Abrego Garcia to the US after American officials presented his government with an arrest warrant.

Read more from Sky News:
Trump says Musk has ‘lost his mind’
Israel warns of new Gaza operation

Chris Van Hollen (R) speaks with Kilmar Abrego Garcia (L). Pic: Press Office Senator Van Hollen/AP
Image:
Chris Van Hollen (R) speaks to Kilmar Abrego Garcia. Pic: Press Office Senator Van Hollen/AP

Democrat senator Chris Van Hollen travelled to El Salvador in April to meet Abrego Garcia, arguing his constitutional rights to due process were being ignored.

Critics of Donald Trump have pointed to the deportation of Abrego Garcia as an example of the excesses of the Republican president’s aggressive immigration policies.

US District Judge Paula Xinis has opened a probe into what, if anything, Mr Trump’s administration has done to secure his return, after his lawyers accused officials of stonewalling their requests for information.

Jennifer Vasquez Sura (R). Pic: AP
Image:
Jennifer Vasquez Sura (R) filed a legal complaint over the deportation of her husband. Pic: AP

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Officials responded by alleging that Abrego Garcia was a member of the MS-13 gang – something his lawyers have strongly denied.

In a separate statement, Pam Bondi also attacked what she called the “Fake News Media” and repeated the – yet unproven – allegations against Abrego Garcia.

“The Justice Department’s Grand Jury Indictment against Abrego Garcia proves the unhinged Democrat Party was wrong, and their stenographers in the Fake News Media were once again played like fools.

“Abrego Garcia was never an innocent ‘Maryland Man’- Abrego Garcia is an illegal alien terrorist, gang member, and human trafficker who has spent his entire life abusing innocent people, especially women and the most vulnerable.”

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