China's April PPI and CPI Show Unexpected Growth, Driven by Energy Prices

China's April Producer Price Index (PPI) rose by 1.7% month-on-month, with the year-on-year increase expanding from 0.5% in the previous month to 2.8%, according to a report by Jin10. The report, citing China International Capital Corporation (CICC), attributes the unexpected rise in PPI primarily to concentrated price increases in the energy and chemical sectors. Meanwhile, the Consumer Price Index (CPI) increased by 0.3% month-on-month, stronger than the seasonal trend, with the year-on-year growth rising from 1.0% to 1.2%, influenced by energy prices and holiday travel demand. Looking ahead, CICC suggests that in the context of ongoing U.S.-Iran negotiations, international oil prices are likely to remain high and volatile. The transmission of oil price shocks to other prices may experience delays, indicating potential upward pressure on PPI and CPI in the coming two months. However, the current recovery in production-side prices shows significant structural divergence, with upstream price increases being notably stronger than those downstream. In an environment of weak terminal consumer demand, inflation driven by input costs may continue to suppress profitability in midstream and downstream industries.