China’s producer inflation hits nearly four-year high ahead of Trump-Xi summit in Beijing

China’s factory-gate inflation climbed to its highest level in nearly four years in April, as the prolonged Iran war and disruptions to global oil supplies pushed up manufacturing costs ahead of a summit between Donald Trump and Xi Jinping in Beijing.

Data released by the National Bureau of Statistics of China on Monday showed the producer price index (PPI) rose 2.8 per cent in April from a year earlier, beating economists’ expectations for a 1.6 per cent increase in a Reuters poll.

The reading marked the second consecutive month of producer inflation and the highest level in 45 months, after factory-gate prices in March turned positive for the first time following a 41-month deflationary streak.

Consumer inflation also accelerated more than expected, with the consumer price index (CPI) rising 1.2 per cent year-on-year in April, compared with forecasts for a 0.9 per cent gain. CPI had risen 1 per cent in March.

More from Business

On a monthly basis, consumer prices rose 0.3 per cent, defying expectations for a 0.1 per cent decline and reversing March’s 0.7 per cent fall.

The inflation surge reflects mounting pressure from soaring commodity and energy prices as the Iran war enters its third month, disrupting shipping and oil flows through the Strait of Hormuz — one of the world’s most critical energy chokepoints.

Chinese manufacturers, especially plastics and chemical producers, have begun facing shortages and rising costs linked to disrupted crude and petrochemical supplies from West Asia.

China, the world’s largest crude importer, has so far cushioned part of the energy shock through strategic oil reserves and its expanding renewable energy base. But economists warn that prolonged disruptions could increasingly feed into consumer prices and industrial costs.

Trade figures released over the weekend showed China’s crude oil imports fell 20 per cent by volume in April from a year earlier, suggesting refiners and manufacturers are reducing purchases amid elevated prices and supply uncertainty.

Despite the inflationary pressures, China’s export machine continued to power ahead.

Exports rose 14.1 per cent in April from a year earlier, lifting the country’s monthly trade surplus to $84.8 billion and keeping Beijing on track for a third consecutive annual surplus nearing $1 trillion.

China’s widening trade surplus with the United States — which has reached $87.7 billion so far this year — is expected to loom large during the Trump-Xi summit later this week.

The meeting comes at a delicate moment for both countries, with tensions persisting over tariffs, export controls, Taiwan and the escalating conflict in West Asia.

Beijing has also sought to expand its diplomatic role in the region. Chinese officials hosted Iranian Foreign Minister Abbas Araghchi last week as China positioned itself as a mediator in efforts to restore stability in Gulf shipping routes.

Analysts at Goldman Sachs said the Middle East conflict is likely to dominate discussions between Trump and Xi, particularly as both economies confront the broader fallout from higher energy prices and disrupted global trade flows.

For Chinese policymakers, the stronger-than-expected inflation data signals a sharp turn from the deflationary pressures that had weighed on the economy for years.

With inputs from agencies.