China’s consumer prices effectively flatlined in May, a jarring contrast to factory-gate prices that have been climbing at their fastest pace in nearly four years.
Data from China’s National Bureau of Statistics, released on June 10, showed the Consumer Price Index stalling after posting a 1.2% year-on-year increase in April. Economists had penciled in a modest acceleration to around 1.3%. They didn’t get it.
The producer-consumer split
The Producer Price Index surged 2.8% year-on-year in April, the fastest growth since July 2022. China has been grappling with long-standing deflationary pressures, which had kept the Producer Price Index in negative territory for over 40 months until March 2026.
The PPI spike has been driven largely by surging energy prices, tied to geopolitical tensions surrounding Middle Eastern supply disruptions. Oil and energy inputs flow directly into manufacturing costs, and Chinese producers, who are among the world’s largest consumers of industrial commodities, feel those price shocks acutely.
