China Watch: Reflation Returns: Energy and core trends drive April inflation rebound

Research evidence excerpt

China Watch: Reflation Returns: Energy and core trends drive April inflation rebound

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China Watch

Reflation Returns: Energy and core trends

drive April inflation rebound

Exhibit 1: Apr CPI and PPI both came in better than expected 11 May 2026

Apr CPI and PPI inflation yoy, vs. consensus and BofA forecasts (announced: 11 May 2026) GEM Economics

CPI PPI Asia | China

% yoy % yoy

Actual 1.2 2.8

Previous 1.0 0.5

Consensus 0.9 1.8

Anna Zhou BofA Global Research 0.8 1.3 China & Asia Economist

Source: BofA Global Research estimates, Bloomberg, NBS Merrill Lynch (Hong Kong)

BofA GLOBAL RESEARCH +852 3508 3909

anna.zhou@bofa.com

Broadening upward price pressures in April Yvonne He

April inflation data surprised to the upside. Headline CPI rose 1.2% yoy, up from 1.0% in ChinaMerrill&LynchAsia Economist(Hong Kong)

March, reflecting both energy effects and firmer underlying inflation. Gasoline prices +852 3508 5396

yvonne.he@bofa.com

jumped 19.3% yoy amid Middle East tensions, contributing around 0.56ppt, while food

prices fell 1.6% yoy, led by weaker pork prices. Core CPI (ex food and energy) also rose HelenChina &QiaoAsia Economist

1.2% yoy, pointing to improving underlying momentum. More notably, PPI rebounded to Merrill Lynch (Hong Kong)

+852 3508 3961

2.8% yoy from 0.5% in March, its second month in positive territory after 41 months of helen.qiao@bofa.com

decline. Sequentially, PPI rose 1.7% mom, the largest increase since 2021.

Services CPI inflation continued to improve

Service prices increased by 0.9% yoy, up from 0.8% in the previous month, contributing

Abbreviations:about 0.44 ppt to headline CPI. Within services, prices for core public services remained

generally stable: medical and education service prices rose by 3.4% and 0.5%, yoy: year-over-year