China’s producer prices rise for 1st time in over 3 years as Middle East war lifts import costs

Producer prices in China rose in March for the first time in three and a half years, as the war triggered by US and Israeli attacks on Iran drove up global commodity and energy prices and fed into domestic costs through imported inflation.

According to price data released by China’s National Bureau of Statistics on Friday, the producer price index (PPI) rose 0.5% year-on-year in March, while the consumer price index (CPI) increased 1%.

The PPI, which measures factory-gate prices of industrial goods, posted its first increase after 41 consecutive months of decline since the final quarter of 2022.

Dong Lijuan, a senior statistician at the National Bureau of Statistics, said rising global commodity and energy prices caused by the Middle East war had pushed up prices across a wide range of industries and helped limit declines in others, describing the increase in producer prices as the result of imported inflation.

Dong also said government measures to curb excess capacity in some industries and prevent price-cutting competition had improved supply-demand conditions in the domestic market, contributing further to upward price pressures.

Producer prices had remained in decline for the past three years after turning lower in late 2022. The index fell 3% in 2023, 2.2% in 2024, and 2.6% in 2025. It also declined 1.4% in January and 0.9% in February this year.

Consumer inflation continued to rise in March, with the CPI climbing 1% year-on-year after increasing 1.3% in February, which marked the strongest gain in three years.

China’s CPI had remained below 1% since 2023. Inflation rose just 0.2% in both 2023 and 2024, while prices were flat in 2025.

Amid the prolonged deflationary trend, the Chinese government last year lowered its annual inflation target to 2% from the usual 3%.

Shipping traffic through the Strait of Hormuz, a critical artery for global trade in goods and energy, had been largely disrupted by the war following US and Israeli attacks on Iran and Tehran’s retaliatory actions in the Gulf.

The strait, which links Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, and Iran to global markets, carries about 25% of global oil trade, 20% of liquefied natural gas trade, and roughly 30% of global fertilizer trade.

Around 45% of China’s imported crude oil and 30% of its LNG imports pass through the Gulf and the Strait of Hormuz.

Disruptions to tanker traffic in the strait have raised concerns over global oil supply and pushed energy prices higher.