11/06/2026

BIZ & FINANCE THURSDAY | JUNE 11, 2026

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China’s May factory gate inflation nears four-year high o PPI rises 3.9% compared with 2025, tops forecasts as Middle East tensions push up costs year, with pork prices dropping 16.1%. Domestic gasoline prices dropped month-on-month, but they rose 23.5% from a year earlier. after falling by around 16% the previous month, OilChem data showed.

BEIJING: China’s producer prices rose for a third straight month in May to the highest since July 2022, while consumer prices stayed elevated as global energy prices piled cost pressures on manufacturers and drove up costs of living for households. Cost pressures from the Iran war could squeeze corporate profits and further subdue domestic con sumption, although global AI-related demand provided a boost for some sectors. For manufacturers not in advanced manufacturing, passing higher input prices to consumers could remain difficult, highlighting headwinds policymakers face in their efforts to support the job market and bolster still-soft domestic demand. The producer price index (PPI) rose 3.9% from a year earlier, National Bureau of Statistics (NBS) data showed yesterday, above a 3.8% forecast in a Reuters poll and 2.8% rise in April. “In industries where demand is solid, such as AI, firms can pass on higher input cost and even charge end consumers a markup,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. That is not the case for industries such as automotives, he said. WASHINGTON: US consumer inflation likely increased at its fastest pace in three years in May as the Middle East conflict raised prices of energy products, which would provide more ammunition for the Federal Reserve to keep interest rates unchanged this year. The anticipated third straight month of strong year-on-year Consumer Price Index readings from the Labour Department yesterday is expected to highlight mounting pressure on households as evidence suggests more consumers are dipping into savings to finance their spending. Inflation is likely to outpace wage growth in May for a second straight month, a development that could weigh on overall economic growth. The soaring cost of living is a political liability for President Donald Trump and his Republican Party, seeking to retain control of Congress in the midterm elections in November. Trump won the 2024 presidential election in large part because of his promise to lower inflation, but has seen his approval rating tumble as frustration mounts over his handling of the economy. “The top-line increase in inflation will outpace wage growth for the second consecutive month,“ said Joseph Brusuelas, chief economist at RSM. “What that means is Americans are seeing their paycheck decline in real terms, which, if it were sustained, would tend to suggest we’re going to have a challenge around household consumption in the second half of the year.” The Consumer Price Index (CPI) likely increased 4.2% in the 12 months through May, a Reuters survey of economists predicted. That would be the largest annual rise in the CPI since April 2023 and would follow a 3.8% advance in April. The CPI increased 3.3% year-on-year in March. It is expected to have increased 0.5% on a

airfares, there were no strong signs of the oil price shock bleeding into the services sector. Excluding the volatile food and energy components, core CPI was forecast to have increased 2.9% year on-year in May after rising 2.8% in April. The so-called core CPI was projected to have gained 0.3% on a monthly basis after rising 0.4%. “If the core was to show some signs of pass through, higher energy costs being reflected into other categories as well, then that would be the story that would trigger the Fed rate-hike narrative,“ said James Knightley, chief international economist at ING. “We’re in an environment where we’ve got a central bank that still considers the monetary policy stance to be somewhat restrictive.” Part of the anticipated moderation in the monthly CPI rate reflects the fading boost from a one-time adjustment to rent measures after last year’s shutdown of the government prevented data collection. While the artificial intelligence spending boom is driving up prices of computers and software, those have a smaller weighting in the core CPI basket. The weighting is larger in the core PCE inflation basket. A surprising used cars and trucks deflation has also helped to curb goods inflation. Economists were divided on import tariffs, with some viewing the pass-through as largely over while others said the duties continued to raise prices, especially those of apparel. “The economy is nearing the end of the tariff pass-through phase,“ said Diego Anzoategui, an economist at Morgan Stanley. “Our estimates suggest tariffs have lifted prices by about 63 basis points so far, with total pass-through closer to 70 basis points. We saw early signs of deceleration in March and expect that trend to continue.” – Reuters Domestic car sales have slumped, with the number of vehicles sold dropping 22.3% in May and 19.7% in the first five months, China Passenger Car Association data showed. Core CPI, which excludes volatile food and fuel prices, rose 1.1% from a year earlier. On a monthly basis, CPI edged down 0.1%, matching expectations and compared with a 0.3% rise in April. “Looking ahead, the main source of uncertainty surrounding the outlook stems from developments in the Middle East and global energy markets,” wrote Abhijit Surya, senior Apac economist of Capital Economics. “However, in our baseline scenario, in which supply disruptions gradually abate, consumer price inflation should subside before long.” – Reuters

“Food and property prices are helping suppress headline inflation for now. But rising prices more broadly suggest we’re moving from deflation into a low inflation environment,” said Lynn Song, chief economist of Greater China for ING. Song does not expect stronger price momentum to lead to higher wages, citing elevated youth unemployment and workers concerns’ for job security amid AI advancements. ANZ analysts revised their PPI forecast for the year to 2% from 0.8% following the data, but left their CPI estimate unchanged at 1.2%, citing limited passthrough from upstream to downstream sectors.

reading turned positive in March for the first time since September 2022. Policy efforts to raise prices, including a government campaign to curb corporate price-cutting, had previously only eased deflation. But the mismatch between supply and demand in China’s economy may worsen as rising costs of living dampen already lukewarm household appetite for discretionary spending. Consumer prices in May rose 1.2% from a year earlier mainly on rising gasoline, gold jewellery and services prices, according to the statistics bureau. The gauge recorded a 1.2% gain in April and economists had expected a 1.3% rise for May. Food prices were down 1.7% on

pointing to rising prices in non ferrous metal smelting and rolling processing, and electronic equipment manufacturing sectors. The PPI increased 0.5% month on-month, less than a 1.7% rise in April. Energy prices have soared since the U S and Israel launched attacks on Iran in late February, and cost pressures are likely to persist as the effective closure of the Strait of Hormuz continues to disrupt oil and gas flows from the Gulf. Resumption of the flows will take time even after the waterway reopens.

Stronger demand for computing power contributed to an increase in the PPI, NBS said in a statement, Higher petrol prices likely lifted US inflation last month The energy-induced price shock has helped lift China’s producer prices out of a years-long deflationary streak, as the year-on-year PPI Since the start of the Iran war, Beijing has lifted diesel retail prices. Gasoline and diesel consumption dropped 13% year-on-year in May

Households are increasingly relying on savings to maintain spending as living costs continue to climb, economists say. – UNSPLASH PIX

Stephen Stanley, chief US economist at Santander US Capital Markets. The report would follow on the heels of news last week that the economy posted a third straight month of above-expectations job growth in May. The unemployment rate remained at 4.3% for a third consecutive month. Though financial markets have started pricing in a rate hike, economists continued to believe that the bar remained high for the central bank to tighten monetary policy. Some argued that outside high

Prices have retreated in recent weeks amid a ceasefire, leaving some economists cautiously hopeful that May could mark the peak in the CPI. Though restricted shipping in the Strait of Hormuz has raised fertilizer prices, that has not yet significantly pushed up food prices. “There is a good chance that the year-over-year advance in headline inflation peaks for the moment in May, though, of course, oil prices could surge again depending on the course of events in the Middle East,“ said

monthly basis in May after advancing 0.6% in April. The US central bank tracks the Personal Consumption Expenditures Price Indexes for its 2% inflation target. All inflation measures are running well above the Fed’s target. The national average gasoline price increased 8.8% in May to US$4.60 a gallon, data from the US Energy Information Administration showed. At one point, gasoline prices had jumped by more than 50% since the US and Israel attacked Iran at the end of February.