Inflation Monitoring: PPI Exceeds Expectations, Historical Scenario Repeated

11 May 2026Date Inflation monitor: PPI overshoots as Yi Xiong, Ph.D. China's April PPI inflation significantly exceeded expectations, surging to 2.8% YoY,indicating a broadening trend of price hikes. The rise in energy and industrial productprices also propelled a CPI rebound, counteracting falling food prices. Although PPI'sjump was a surprise, it is consistent with historical patterns that point to further Chief Economist Deyun OuEconomist+852-2203 6166 China's PPI inflation rose much faster than expected in April. Headline PPI jumpedto 2.8% YoY from 0.5% in March. Prices rose 1.7% MoM sequentially, almostdoubling the 0.9% MoM increase in March. Price increases were led by petroleum,with its extraction and processing showing higher MoM growth. Notably, this priceincrease has transmitted to the chemical industry, as evidenced by higher growth Energy and industrial product prices drove a rebound in CPI, offsetting theimpact of falling food prices. Food inflation remained below seasonality and turnednegative to -0.8% YoY, dragged down by pork prices (-15% YoY) and broad price cutin vegetable and fruits. However, CPI further rose to 1.2% YoY from 1.0%, supportedby rising energy prices and core inflation. Fuel prices surged to 17.4% YoY,contributing0.45ppt to overall CPI inflation(0.15ppt in March).Core CPIoutperformed seasonality and recorded 1.2% YoY growth (+0.1ppt). Transmission We revise up our inflation forecast.Although PPI's jump in April was a surprise, itis consistent with historical patterns (see our note A Short Guide to RMB Assets ina PPI Reflation). We revise up 2026 PPI annual forecast to 3.2% (+1.4 ppt), expectingit to reach 5% in the second half. CPI forecast is also lifted to 1.6% (+0.1ppt), likelyreaching 2.0% by year end. The improved inflation outlook would further benefit Source : Deutsche Bank Research, NBS Source : Deutsche Bank Research, NBS Source : Deutsche Bank Research, NBS Source : Deutsche Bank Research, NBS Source : Deutsche Bank Research, NBS Source : Deutsche Bank Research, NBS Appendix 1 Important Disclosures *Other information available upon request *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from localexchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies,and other sources. For further information regarding disclosures relevant to Deutsche Bank Research, please visit our globaldisclosure look-up page on our website at https://research.db.com/Research/Disclosures/FICCDisclosures. Aside from withinthis report, important risk and conflict disclosures can also be found at https://research.db.com/Research/Disclosures/ Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition, theundersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively 'DeutscheBank'). Though the information herein is believed to be reliable and has been obtained from public sources believed to bereliable, Deutsche Bank makes no representation as to its accuracy or completeness. Hyperlinks to third-party websites in thisreport are provided for reader convenience only. Deutsche Bank neither endorses the content nor is responsible for the If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this report, oris included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche Bank may act asprincipal for its own account or as agent for another person. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own accountor with customers, in a manner inconsistent with the views taken in this research report. Others within Deutsche Bank,including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this researchreport. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linked analysis,quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ fromrecommendations contained in others, whether as a result of differing time horizons, methodologies, perspectives or Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do notnecessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank provides liquidityfor buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts sometimes haveshorter-term trade ideas that may be inconsistent with Deutsche Bank's exist