US-Iran War Begins to "Claim Victims" in China
The US-Iran war is beginning to “claim victims” in China, with inflation rising in the country. Consumer prices increased in April due to the global rise in crude oil costs stemming from the conflict between the United States (US) and Iran.
This is indicated by official data from the National Bureau of Statistics (NBS), on Monday (11/5/2026). China’s Consumer Price Index (CPI), the main measure of inflation, rose 1.2% year-on-year (yoy) last month.
“This was caused by changes in international crude oil prices and increased holiday travel demand,” said NBS Chief Statistician Dong Lijuan, as reported by AFP.
“Domestic gas prices rose 19.3% annually,” Dong added, influenced by fluctuations in international commodity prices.
The five-day holiday at the start of May (Golden Week celebrating Labour Day) typically also causes an increase in travel and spending in the preceding weeks. However, last month’s CPI remains well below the government’s target of two percent for this year.
The Producer Price Index (PPI) for April, which measures wholesale inflation, increased by 2.8% annually, up from 0.5% in March. This figure exceeded Bloomberg’s estimate of 1.8% and marks the fastest pace since July 2022, when PPI rose 4.2% annually.
The indicator had fallen into negative territory in October and did not reverse until March.
“The rise in international crude oil prices has driven up prices in domestic oil-related sectors,” Dong stated again, mentioning fuel processing and raw material manufacturing.
Nevertheless, analysts believe the shock caused by the oil blockade in the Middle East is temporary. It will not develop into reflation, a condition where the government or central bank seeks to raise inflation and economic growth after the economy has been too weak, sluggish, or experienced deflation.
“The impact from the Iran War has again pushed inflation in April, but price pressures remain limited and are unlikely to develop into a broader reflationary impulse,” Capital Economics said in a note.
“With excess capacity in most sectors yet to be resolved and domestic demand growth still slow, the elements for a sustained reflationary push appear to be missing,” it added.
It should be noted that CPI is downstream inflation while PPI is upstream inflation.
Detailed Data
Meanwhile, citing Trading Economics, non-food inflation rose in detail (1.8% vs 1.2% in March), with transportation costs increasing significantly (4.6% vs 0.9%), amid higher energy prices and supply chain disruptions related to the ongoing Middle East conflict.
Additionally, prices continued to rise for clothing (1.5% vs 1.6%), healthcare (2.2% vs 1.9%), and education (1.3% vs 1.1%). In contrast, the decline in housing costs persisted (-0.2% vs -0.2%).
On the food side, prices fell 1.6%, reversing the 0.3% increase in March and marking the first decline since January, reflecting persistently weak pork prices and drops in fresh vegetables and fruits. Core inflation, excluding food and energy, rose 1.2% yoy, after a 1.1% increase in March.
On a monthly basis, CPI increased 0.3%. This figure reversed the previous 0.7% decline and contrasted with the consensus forecast of a 0.1% drop.