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<Research> Bank of China Securities: Impact of Rising Energy Prices Emerging, Expects PPI YoY Growth to Trend Upward Volatilely Within the Year
Bank of China Securities released a report stating that mainland China's March CPI YoY growth was below market consensus expectations, while PPI YoY growth met consensus expectatio...
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<Research> Bank of China Securities: Impact of Rising Energy Prices Emerging, Expects PPI YoY Growth to Trend Upward Volatilely Within the Year
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Bank of China Securities released a report stating that mainland China's March CPI YoY growth was below market consensus expectations, while PPI YoY growth met consensus expectations. CPI growth was affected by a seasonal decline in consumption following the Chinese New Year holiday, with food and services prices exerting a notable drag on CPI YoY growth. PPI YoY growth was mainly influenced by imported factors, turning positive on a YoY basis. The impact of rising international energy prices was more significant on PPI, while the effect on CPI was mitigated to some extent by the refined oil pricing adjustment mechanism. The bank expects PPI YoY growth to trend upward in a volatile manner within the year.

In March, mainland China's CPI fell 0.7% MoM and rose 1% YoY. Core CPI increased 1.1% YoY, services prices rose 0.8% YoY, and consumer goods prices increased 1.3% YoY. Affected by warmer weather boosting supply and a post-holiday drop in demand, food prices in March declined MoM, reversing the increase recorded in February. Following the long holiday, seasonal consumption demand fell markedly, coupled with increased supply in certain service sectors after the holiday. Airfares, vehicle rentals, travel agency fees, pet services, vehicle repair and maintenance, housekeeping services, movie and performance tickets, and dining out collectively dragged CPI down by approximately 0.48 ppts MoM.

Related NewsLoan Prime Rate 1Y for April 2026 in China is 3.00%, unchanged from its last period. The forecast was 3.0%.
Considering the domestic refined oil pricing adjustment mechanism, the impact of international oil price fluctuations on China's CPI is expected to weaken. However, looking at full-year 2026, relatively low food prices and the slow release of domestic demand may continue to weigh on CPI YoY performance. Without adjusting oil price assumptions, the bank expects CPI YoY growth to fluctuate within a range of 0.5% to 1% during the year.

In March, PPI increased 1% MoM and rose 0.5% YoY. Among which, producer goods prices rose 1% YoY, while consumer goods prices fell 1.3% YoY. PPIRM increased 1.2% MoM and rose 0.8% YoY. Among major industries in March, sectors with relatively high ex-factory price YoY growth included non-ferrous metal mining and processing (36.4%), non-ferrous metal smelting and rolling processing (22.4%), and oil and natural gas extraction (5.2%). Sectors with more notable acceleration in YoY growth compared with February included oil and natural gas extraction, petroleum, coal and other fuel processing, and non-ferrous metal mining and processing.

PPI rose 1% MoM, marking the largest increase in 48 months. March PPI performance was mainly driven by two factors: first, a sharp rise in international crude oil and other commodity prices led to rapid price increases in domestic petroleum-related industries, serving as the primary reason for the expanded MoM gain in PPI; second, industrial enterprises and construction projects gradually resumed operations after the holiday, leading to a rebound in demand for energy and steel. Looking at full-year 2026, the bank believes that after PPI YoY growth turned positive in March, it will maintain positive YoY growth throughout the year, with YoY growth trending upward in a volatile manner. In 4Q26, YoY growth may rise to around 2%. (wl/j)

Related NewsLuckin Coffee (LKNCY.US) to Launch Bottled Ready-to-Drink Coffee in Late Apr Priced at RMB6-7, Lower Than Starbucks



This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation.

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