Beijing: China’s factory-gate prices are expected to experience growth in March, marking the end of a 41-month period of decline as global oil prices drive up industrial costs. This change is highlighted by a survey conducted by Beijing-based news outlet Caixin.

According to Anadolu Agency, the survey indicates that the producer price index (PPI) is anticipated to increase by 0.5% year-on-year in March, reversing the contraction seen in February. Meanwhile, consumer inflation is expected to slightly decrease, with the consumer price index (CPI) projected to ease to 1.2% from 1.3% the previous month, as demand softened following the Lunar New Year holiday.

The anticipated disparity underscores uneven price pressures in China, the world’s second-largest economy, where imported inflation is heightening costs for producers, while domestic consumption remains lukewarm. Economists attribute the expected recovery in factory-gate prices to higher crude oil prices, which are influenced by Middle East tensions, stronger global demand, and speculative buying.

Zhang Yu, chief economist at Huachuang Securities, estimated that the surge in oil prices might have added approximately 1 to 1.2 percentage points to the month-on-month PPI growth, as reported by Caixin. On the consumer front, economists noted that food and service prices likely fell on a monthly basis after the holiday season.

Wen Bin, chief economist at China Minsheng Banking, pointed out that pork prices dropped about 10% month-on-month due to abundant supply and diminished seasonal demand. On the other hand, Wu Ge, chief economist at Changjiang Securities, cautioned that the rise in prices does not necessarily indicate a widespread recovery in corporate profitability, emphasizing that the increases were primarily driven by supply shocks and base effects.