China K-Shaped Inflation

China's inflation has turned 'K-shaped' as the PPI-CPI gap became positive in April, driven by rising costs in upstream sectors like energy and gold.

Key Takeaways

• 1.The PPI-CPI gap turned positive in April 2026, signaling a cost-push inflation cycle that favors upstream sectors.
• 2.Consumer price inflation remains constrained by a slack labor market and high household debt levels (1.39x disposable income).
• 3.ANZ maintains its 2026 CPI forecast at 1.2%, with the PPI outlook largely dependent on oil prices.

Table of Contents

• Highlights of the data
• The Outlook
• Important Notice

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