CICC: PPI and CPI Annual Growth Expected to Rise Further in Coming Two Months Amid Structural Inflation

CICC commented on April 2026 price data, noting that April PPI rose 1.7% month-on-month, with the year-on-year increase expanding from 0.5% to 2.8%, beating expectations, primarily because price increases were highly concentrated in the energy and petrochemical industrial chain. April CPI rose 0.3% month-on-month, stronger than seasonal norms, while CPI year-on-year growth recovered from 1.0% to 1.2%, mainly boosted by energy prices and holiday travel demand.

Looking ahead, CICC believes that against the backdrop of ongoing US-Iran negotiations, international oil prices will most likely remain elevated and range-bound. Given the lag in price transmission from oil price shocks, PPI and CPI year-on-year growth are expected to have further upside in the coming two months. However, the current round of producer-side price recovery shows clear structural divergence, with upstream price increases significantly stronger than downstream. In an environment of weak terminal consumer demand, input-cost-driven imported inflation may continue to weigh on the profitability of mid- and downstream industries.

CICC: Structural Inflation Characteristics Emerge - April 2026 Price Data Review

April PPI rose 1.7% month-on-month, with year-on-year growth expanding from 0.5% to 2.8%, beating expectations mainly because price increases were highly concentrated in the energy and petrochemical chain. April CPI rose 0.3% month-on-month, stronger than seasonal patterns, with year-on-year CPI growth recovering from 1.0% to 1.2%, driven by energy prices and holiday travel demand.

1. Above-Forecast PPI Driven by Concentration in Energy and Chemical Sectors

April PPI year-on-year growth expanded from 0.5% to 2.8%, and month-on-month PPI rose 1.7%, exceeding forecasts based on PMI output prices and raw material indices. CICC believes this may be related to the PPI increase being highly concentrated in a few industries. Historically, when mining and upstream manufacturing PPI contributions are high, PMI-based PPI forecasts tend to diverge more from actual results.

A key reason for the above-forecast PPI was the highly concentrated gains in the energy-chemical chain. In April, oil and gas extraction, petroleum and coal processing, and chemical raw materials and products saw significant month-on-month PPI increases.

2. CPI Stronger Than Seasonal, Energy and Travel Demand Are Key Drivers

April CPI rose 0.3% month-on-month, stronger than seasonal patterns. Year-on-year CPI recovered to 1.2% from 1.0% in March. Energy prices and holiday travel consumption were the main upside contributors. Core CPI remained relatively stable, consistent with weak underlying domestic demand.

3. Outlook: Structural Divergence to Persist

With oil prices remaining elevated and energy cost transmission still working through the supply chain, upstream pricing pressure is likely to persist. However, weak terminal demand means mid- and downstream producers will face continued margin pressure from rising input costs.