China’s producer prices rose from -0.9% yoy to 0.5% yoy in March, marking the first positive reading since September 2022 and ending a prolonged period of factory-gate deflation. The rebound was driven largely by energy-linked sectors, with non-ferrous metal mining surging 36.4% and smelting rising 22.4%, as higher oil prices pushed up input costs.
In contrast, consumer inflation softened. CPI slowed from 1.3% yoy to 1.0% yoy, below expectations of 1.2% yoy. Core CPI eased from 1.8% yoy to 1.1% yoy. On a monthly basis, CPI fell -0.7%, a sharper decline than the expected -0.2% and reversing February’s 1.0% increase.
While rising commodity prices are lifting producer costs, weak consumer demand and policy measures such as fuel price caps are limiting pass-through to households.
