On May 11th, data released by the National Bureau of Statistics showed that in April 2026, the Producer Price Index (PPI) increased by 2.8% year-on-year and 1.7% month on month. From October 2022 to February 2026, the year-on-year growth rate of PPI had been negative for 41 consecutive months, but in March of this year, it turned to a year-on-year increase of 0.5%, and in April, the growth rate significantly expanded again.

Dong Lijuan, Chief Statistician of the Urban Department of the National Bureau of Statistics, explained that due to the rapid rise in international commodity prices, the increasing demand in some domestic industries, and the continuous optimization of market competition order, PPI increased by 2.8% year-on-year, and the growth rate has expanded compared to the previous month.

Specifically, international input factors in April led to a significant increase in prices in the domestic petroleum related industry. From a month on month perspective, prices in the oil and gas extraction industry increased by 18.5%, prices in the petroleum, coal, and other fuel processing industries increased by 16.4%, prices in the chemical raw materials and chemical products manufacturing industry increased by 8.3%, prices in the chemical fiber manufacturing industry increased by 5.6%, and prices in the rubber and plastic products industry increased by 1.7%.

Zhang Lin, Vice President of Far East Credit Research Institute, stated that input factors are still the dominant force driving the upward trend of PPI in April. Since March, the oil industry chain has driven PPI by about 0.6 percentage points month on month. Although international oil prices remained high and volatile in April, the main raw material purchase price index still reached 63.7%. The year-on-year increase in the Ministry of Commerce's production material price index in April further expanded to 8.2%, all confirming the sustained support of external cost increases for PPI. In contrast, the direct driving force of domestic demand still occupies a secondary position, but its marginal contribution is increasing. The direct contribution of computing power and electrification industry chain to PPI month on month has significantly increased in February and March this year. The effect of the "anti internal competition" policy continues to emerge, and the prices of new energy industry chains such as fiber optics and lithium batteries have stabilized. Domestic new kinetic energy is becoming the second fulcrum for PPI repair.

According to Nomura Securities, the year-on-year growth rate of China's crude oil imports in April surged from -4.4% in March to 13.2%. However, based on transaction volume, the year-on-year decline in April decreased from -2.8% in March to -20.0%. This reflects the decrease in the number of imported barrels and the surge in crude oil prices.

Regarding the potential impact of the rapid rise in PPI, Zhang Lin stated that from a positive perspective, industrial enterprise profits increased by 15.5% year-on-year from January to March this year, with improved cost transmission and increased momentum for enterprise profit recovery. But hidden concerns cannot be ignored: the recovery pace of terminal consumer demand is slow, and the PPI increase in the processing industry is relatively low. If the structural price differentiation between upstream and downstream continues, the profit margin of downstream links may be further squeezed. The current PPI still relies heavily on the external environment. Once international oil prices fall or overseas demand weakens, there is pressure for another pullback in PPI, and the sustainability of subsequent increases remains to be observed.

In April 2026, Zhang Jun, Chief Economist of China Galaxy Securities, issued an article stating that the positive effect of price recovery is based on a moderate and predictable premise. If prices rise too quickly, it may compress residents' actual income and suppress demand. Therefore, while promoting the return of prices to a reasonable range, we should strengthen support for low-income groups and affected industries, and stabilize inflation expectations through policy guidance. Overall, industrial product prices are expected to break out of the sustained low range, which not only helps stabilize market expectations and enhance endogenous economic power, but also creates more favorable macro conditions for promoting industrial structure optimization and high-quality development.

Image source: National Bureau of Statistics