China’s consumer and producer prices accelerated far more than expected in April, data released Sunday by the National Bureau of Statistics showed, as the ongoing disruption to global energy supplies from the Iran war pushed commodity costs sharply higher across the world’s second-largest economy. The consumer price index rose 1.2% year-on-year, while the producer price index surged 2.8%, both well above economist forecasts and marking the fastest pace of factory-gate inflation in nearly four years.
Energy Shock Feeds Through to Prices
The readings represent a dramatic acceleration from March, when CPI came in at 1.0% and PPI at 0.5%. Economists surveyed ahead of the release had expected CPI to ease to around 0.8% to 1.0% and PPI to rise between 1.5% and 1.9%, making the overshoot one of the largest in recent memory.
The main driver is the closure of the Strait of Hormuz, which has choked off roughly 20% of the world’s seaborne oil trade since the United States and Israel launched an air campaign against Iran on February 28. Oil prices have surged above $100 per barrel at times since the conflict began, with the International Energy Agency calling the disruption the “largest supply disruption in the history of the global oil market”. China’s crude oil imports fell to 8.03 million barrels per day in April — the lowest since mid-2022 — as tanker traffic through the strait remained severely restricted, according to freight monitoring firm Kpler. Reuters reported that China’s crude oil imports for the first four months of 2026 still tracked 1.3% above the prior year at 185.3 million tons, reflecting heavy stockpiling earlier in the year.
Strategic Buffers Soften the Blow
China has partially insulated itself from the worst of the energy shock. The country held nearly 1.4 billion barrels of onshore strategic reserves as of December 2025, enough to cover roughly three to four months of supply, according to the U.S. Energy Information Administration. Beijing also imposed a ban on refined fuel exports to protect domestic supply, pushing refined product exports to 3.1 million tons in April, a near-decade low.
Morgan Stanley’s chief China economist Robin Xing noted after the March data that “China performs better than many of its counterparts during a significant but not extreme oil shock, thanks to its energy flexibility and policy adaptability”. China’s rapid buildout of renewable energy capacity and its shift toward electric vehicles — which now account for more than half of new car sales — have reduced the economy’s overall vulnerability to oil price swings, according to CNN.
Exports Defy Expectations
Separately, customs data released Saturday showed China’s exports surged 14.1% year-on-year in April in U.S. dollar terms, far exceeding the 7.9% increase forecast by economists and accelerating sharply from March’s 2.5% growth. The Associated Press reported that manufacturers rushed to fulfill a wave of international orders from buyers stockpiling goods amid fears that the Iran conflict could push input costs even higher. The New York Times reported that the trade surplus swelled to $84.8 billion in April, keeping China on track for a third consecutive year of roughly trillion-dollar surpluses. Imports also beat forecasts, rising 25.3%, inflated in part by higher commodity prices tied to the energy crisis.
The inflation overshoot raises the stakes for policymakers in Beijing, who set a CPI growth target of around 2% for 2026 and face a balancing act between supporting a still-fragile domestic recovery and containing imported price pressures as the Iran conflict grinds on.
