--- title: "Data Commentary | PPI Rises: It's Not Just Crude Oil (Shenwan Hongyuan Macro · Zhao Wei Team)" type: "News" locale: "en" url: "https://longbridge.com/en/news/282321396.md" description: "On April 10th, the National Bureau of Statistics announced the inflation data for March, with the CPI year-on-year at 1%, previous value at 1.3%, expected at 1.3%, and month-on-month at -0.7%; the PPI year-on-year at 0.5%, previous value at -0.9%, expected at 0.5%, and month-on-month at 1%. The rebound in PPI was mainly influenced by the contraction of supply in the mid and downstream sectors and the surge in oil prices, with the supply shock in the downstream of the petrochemical chain increasing the PPI growth rate. Despite the decline in copper prices, the prices of non-ferrous metals such as rare earths and aluminum rose, driving PPI upward. The performance of CPI in March was weaker than in previous years' February, mainly due to a significant decline in food and service prices" datetime: "2026-04-10T09:22:51.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/282321396.md) - [en](https://longbridge.com/en/news/282321396.md) - [zh-HK](https://longbridge.com/zh-HK/news/282321396.md) --- # Data Commentary | PPI Rises: It's Not Just Crude Oil (Shenwan Hongyuan Macro · Zhao Wei Team) Summary Event: On April 10, the National Bureau of Statistics released the March inflation data, with CPI year-on-year at 1%, previous value at 1.3%, expected at 1.3%, and month-on-month at -0.7%; PPI year-on-year at 0.5%, previous value at -0.9%, expected at 0.5%, and month-on-month at 1%. l Core Viewpoint: The contraction in supply from mid to downstream, along with price increases in non-copper metals, amplified the rebound in PPI. The surge in oil prices has driven the rebound in PPI while also causing supply shocks in the downstream of the petrochemical chain, amplifying the price increase in the mid to downstream PPI. In March, PPI increased by 1% month-on-month, rising 1.4 percentage points year-on-year to 0.5%; among them, the surge in international oil prices has driven the PPI of domestic oil and gas extraction and related industries higher; at the same time, the sharp short-term increase in oil prices directly impacted industrial production in the downstream of the petrochemical chain, with the contraction in mid to downstream supply amplifying the price increase. The price increases in oil processing (5.8%), chemical raw materials (3.6%), and other industries exceeded historical transmission experiences; it is estimated that the combination of crude oil and the contraction in mid to downstream supply contributed to a month-on-month increase in PPI of 0.7%. Although copper prices have retreated, the significant price increases in other non-ferrous metals such as rare earths and aluminum have additionally driven PPI upward. Since the beginning of this year, the PPI of non-ferrous mining and non-ferrous rolling has consistently exceeded the transmission range that copper prices should have reflected, mainly due to the price increases in other non-ferrous metals; March also showed a similar phenomenon, with high-frequency copper prices down 3.1% month-on-month, but non-ferrous mining (5.4%) and non-ferrous rolling (1%) increased month-on-month, mainly due to price increases in rare earths (11.8%) and aluminum smelting (0.7%); the price increases in coal and steel were limited, with coal mining and black rolling PPI increasing only 0.1% and 0.3% month-on-month, respectively, estimating that the contribution of coal and steel to PPI month-on-month was 0%. The performance of CPI in March was weaker than in previous years following the Spring Festival, mainly because the decline in food and service prices was greater than in the same period last year. In March, CPI decreased by 0.7% month-on-month, weaker than the performance in the month after the Spring Festival last year (-0.4%). First, influenced by warmer weather and increased supply, food CPI decreased by 2.7% month-on-month, significantly lower than the same period last year. Among them, the prices of fresh vegetables and fresh fruits decreased by 10.1% and 3.3%, respectively, while increased supply of pork dragged down pork prices month-on-month (-7.3%). Second, the significant decline in service demand after the Spring Festival also led to a noticeable weakening of service CPI, with prices for airplane tickets, vehicle rentals, and travel agency fees decreasing by 29.5%, 18.9%, and 14.2%, respectively. Core commodity CPI remained high, more supported by the prices of other core commodities. In March, the core commodity CPI year-on-year remained high (1.6%). Structurally, influenced by the decline in international gold prices, domestic gold jewelry prices fell for the first time in eight months. Excluding gold jewelry, the remaining core commodity CPI slightly rebounded, rising 0.3 percentage points year-on-year to -1.4%, reflecting more the transmission of PPI increases to core commodity CPI and the rebound in demand for some domestic products Looking ahead, the backwardation of futures and spot prices may indicate that the PPI in the second quarter could still surge significantly, with the CPI expected to remain high. In terms of PPI, although futures prices have fallen to around USD 100-110, reflecting adjustments in market expectations, spot prices remain high at around USD 130. If spot oil prices continue to stay above USD 110/barrel through May, the year-on-year PPI may rise to around 2.0% in April-May; regarding CPI, the surge in oil prices affects CPI through two main paths: "oil price - refined oil CPI" and "PPI - core goods CPI," with the CPI expected to rise year-on-year in the second quarter, likely centered around 1.3%. l Regular tracking: March PPI year-on-year rebound, CPI year-on-year decline. Food and Dining: CPI year-on-year decline, with a significant drop in fresh vegetable prices within food CPI. In March, the CPI year-on-year fell by 0.3 percentage points to 1%. Among them, fresh vegetables in the food CPI dropped significantly by 6 percentage points to 4.9%. Non-food Consumer Goods CPI: CPI for vehicles, communication tools, and fuels for vehicles all saw a rebound. Among non-food items, the CPI for vehicles and communication tools both rebounded, marginally increasing by 0.1 and 0.7 percentage points to -1.1% and 2.6%, respectively. Service CPI: Household service CPI showed a significant decline. In March, the overall service CPI year-on-year fell by 0.8 percentage points to 0.8%. Among them, household service CPI dropped significantly by 2.7 percentage points to 1.1%. Risk Warning Food supply is tighter than expected, and energy supply is tighter than expected. Report Body Event: On April 10, the National Bureau of Statistics released March inflation data, with CPI year-on-year at 1%, previous value at 1.3%, expected at 1.3%, month-on-month at -0.7%; PPI year-on-year at 0.5%, previous value at -0.9%, expected at 0.5%, month-on-month at 1%. 1. Core Viewpoint: March PPI increase is not just due to crude oil The surge in oil prices has driven the PPI rebound while also causing supply shocks in the downstream of the petrochemical chain, amplifying the PPI increase in the mid and downstream sectors. In March, the PPI rose by 1% month-on-month and increased by 1.4 percentage points year-on-year to 0.5%. Among them, international oil prices rose significantly (21.9% month-on-month), driving up the PPI of domestic oil and gas extraction (15.8% month-on-month) and other related industries. At the same time, the sharp short-term rise in oil prices directly impacted industrial production in the downstream of the petrochemical chain, with the contraction of mid and downstream supply amplifying the price increase, such as in petroleum processing (5.8%), chemical raw materials (3.6%), and chemical fibers (3.4%), where the price increases exceeded historical transmission experiences. It is estimated that the contraction of crude oil and mid and downstream supply together contributed to a month-on-month PPI increase of 0.7%, being the largest contributing factor Although copper prices have retreated, the prices of other non-ferrous metals such as rare earths and aluminum have risen significantly, further driving up the PPI. Since the beginning of this year, the PPI for non-ferrous mining and non-ferrous rolling has consistently exceeded the extent that copper prices should have transmitted, mainly due to price increases in other non-ferrous metals; a similar phenomenon was observed in March, where the high-frequency copper price decreased by 3.1% month-on-month, but the PPI for non-ferrous mining (5.4%) and non-ferrous rolling (1%) increased month-on-month, primarily due to price increases in rare earths (11.8%) and aluminum smelting (0.7%), estimating that non-ferrous metals contributed 0.1% to the month-on-month PPI. Domestically, the price increases for coal and steel have been relatively limited, with the month-on-month PPI for coal mining and black metal rolling only increasing by 0.1% and 0.3%, respectively, estimating that coal and steel contributed 0% to the month-on-month PPI. The CPI in March performed weaker than in previous years' Februarys, with food prices declining more than in the same period last year. The March CPI decreased by 0.7% month-on-month, weaker than the performance in the first month after the Spring Festival last year (-0.4%). Breaking down the structure, influenced by factors such as warmer weather increasing supply and a post-holiday drop in demand, the food CPI decreased by 2.7% month-on-month, significantly worse than the performance in the first month after the Spring Festival last year (-0.8%). Among them, the prices of fresh vegetables and fresh fruits decreased by 10.1% and 3.3%, respectively, showing a significant decline; the increase in pork supply dragged down the pork price month-on-month (-7.3%). After the Spring Festival, the demand for services has significantly declined, leading to a noticeable weakening of the service CPI. In March, the service CPI month-on-month (-1.1%) was significantly lower than the same month in previous years after the Spring Festival (-0.4%). Among them, the core service CPI performed weakly, with prices for airplane tickets, vehicle rentals, and travel agency fees decreasing by 29.5%, 18.9%, and 14.2% respectively, collectively impacting the CPI month-on-month decline by approximately 0.34 percentage points; pet services, vehicle repair and maintenance, and housekeeping services also saw significant declines of 10.1%, 9.4%, and 4.9% respectively. In addition, the current demand for rental housing is weak, causing the March rental CPI to maintain a historical low of -0.5% year-on-year. The core commodity CPI remains high, largely supported by the prices of other core commodities. In March, the core commodity CPI year-on-year remained high (1.6%). Breaking down the structure, influenced by the decline in international gold prices, domestic gold jewelry prices fell by 3.9% for the first time after rising for 8 consecutive months month-on-month. Excluding gold jewelry, the remaining core commodity CPI saw a slight year-on-year rebound, increasing by 0.3 percentage points to -1.4%, reflecting more the transmission of PPI increases to the core commodity CPI and the rebound in demand for some domestic products. Among them, domestic refined oil prices have adopted temporary control measures, and after the adjustment, gasoline prices increased by 11.1%, impacting the CPI month-on-month increase by approximately 0.31 percentage points. Looking ahead, the inverted relationship between futures and spot prices may indicate that the PPI could still surge significantly in the second quarter, with the CPI expected to remain high. Regarding PPI, although crude oil futures prices have fallen to around $100-110, indicating an adjustment in market expectations, the spot price of crude oil remains high at around $130. If the spot price of crude oil continues to stay above $110 per barrel in May, the year-on-year PPI may rise to around 2.0% in April-May; In terms of CPI, the surge in oil prices affects CPI through two main paths: "oil prices - refined oil CPI" and "PPI - core commodity CPI." It is expected that the CPI will rise year-on-year in the second quarter, with a central tendency around 1.3%. 1. Regular Tracking: March PPI rises year-on-year, CPI falls year-on-year PPI rose year-on-year, with a significant increase in production materials. In March, PPI increased by 0.5% year-on-year, rising 1.4 percentage points compared to the previous month. Structurally, production materials rose by 1.7 percentage points to 1% compared to the previous month, while living materials rose by 0.3 percentage points to -1.3%. CPI: CPI fell year-on-year, with a significant decline in the price of fresh vegetables within the food CPI. In March, the CPI fell by 0.3 percentage points year-on-year to 1%. Among them, food CPI was 0.3%, down 1.4 percentage points from the previous month. Structurally, the CPI for fresh vegetables, pork, and fresh fruits saw significant declines, with marginal decreases of 6, 2.9, and 1.9 percentage points to 4.9%, -11.5%, and 4%, respectively. Consumer Goods CPI: The CPI for transportation and communication tools both saw an increase. Among non-food items, the CPI for transportation and communication tools both rose, with marginal increases of 0.1 and 0.7 percentage points to -1.1% and 2.6%, respectively; the CPI for household appliances fell, decreasing by 2.9 percentage points year-on-year to 2.4%. The CPI for fuels used in transportation rose by 12.4 percentage points year-on-year to 3.4%, while the CPI for water, electricity, and fuels rose by 0.2 percentage points year-on-year to 0.6% In terms of service CPI, the household service CPI has decreased significantly. In March, the overall service CPI fell by 0.8 percentage points year-on-year to 0.8%. Specifically, the education service CPI remained flat compared to the previous month (0.5%), the household service CPI decreased by 2.7 percentage points year-on-year to 1.1%, and the medical service CPI increased by 0.2 percentage points year-on-year to 3%. Risk Warning 1. Food supply is tighter than expected. Weather factors may cause changes in domestic agricultural products and exert additional pressure on food CPI. 2. Energy supply is tighter than expected. 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