ECONOMY

Analysis: China’s Price Cycle Shows Signs of Turning, but Demand Still Lags

By Yu Hairong, Wang Liwei and Jonathan Breen

Published: Apr. 24, 2026 5:23 p.m. GMT+8

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China’s long stretch of low prices is showing signs of easing, with producer prices returning to growth for the first time in more than three years.

The shift marks a potential inflection point for an economy that has faced prolonged deflationary pressure, though the durability of the recovery remains uncertain.

Data released by the National Bureau of Statistics (NBS) showed that the producer price index (PPI) rose 0.5% year-on-year in March, ending 41 consecutive months of decline. Month-on-month, the PPI has risen for six straight months, with March recording the fastest increase in four years.

China’s Factory Prices Rise for First Time in 3.5 Years

The pickup has narrowed the gap between nominal and real growth, with nominal GDP rising 4.94% year-on-year in the first quarter, close to the 5% real growth rate.

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Explore the story in 30 seconds

China's PPI rose 0.5% YoY in March, ending 41 months of declines; MoM up for six straight months, fastest in four years.
Driven by higher global commodity prices (e.g., oil from Middle East conflict) and domestic factors like supply-demand improvements, capacity controls.
Uneven recovery: upstream gains, but weak downstream/consumer prices; urban unemployment at 5.4%, subdued demand.

AI generated, for reference only